Monday, September 15, 2008

Lehman files for bankruptcy protection

NEW YORK (MarketWatch) -- Wall Street awoke to a dramatically changed world on Monday as Lehman Brothers' bankruptcy filing rocked investors and pulled down financial stocks around the globe.
Lehman (LEH:
Lehman Brothers Holdings Inc
Last: 0.21-3.44-94.37%
12:25pm 09/15/2008
Delayed quote data
Sponsored by:
LEH 0.21, -3.44, -94.4%) on Monday filed for Chapter 11 bankruptcy protection, ending the 158-year-old Wall Street firm's run and rattling the foundation of the global financial system.
Lehman said that it will continue business while it explores the sale of its broker and investment-management units and other strategic alternatives.
The news sent the firm's shares tumbling more than 90% Monday morning and shook financial stocks. See full story.
The filing shows that Lehman is closing its doors with more than $600 billion of debt. The bank has total debts of $613 billion against total assets of $639 billion. Its filing with the Bankruptcy Court of the Southern District of New York shows that Lehman had more than 100,000 creditors.
The announcement came after a frantic weekend of negotiations in which potential acquirers backed away from a deal and federal officials balked at committing taxpayer funds to help save the Wall Street giant.
In a statement on its Web site, Lehman said the filing would affect only the parent, Lehman Brothers Holdings, and that its subsidiaries, including Neuberger Holdings LLC, would continue to operate and customers could make trades.
Chart of LEH
Neuberger assets are separate from Lehman Brothers and won't be subject to Lehman creditors' claims, the company said.
The company said its board approved the bankruptcy filing "in order to protect its assets and maximize value."
Lehman said it would file motions Monday to allow it to continue operating and pay its employees during the bankruptcy reorganization.
Lehman did not say it was filing under the section of federal bankruptcy law that would have led to liquidation.
The company said it is exploring the sale of its broker-dealer operations and will continue exploring the sale of its investment-management division. It will also "consider other strategic alternatives."
The move into bankruptcy came after last-minute talks with Barclays PLC (BCS:
Barclays PLC
Last: 22.13-3.05-12.11%
12:24pm 09/15/2008
Delayed quote data
Sponsored by:
BCS 22.13, -3.05, -12.1%) (UK:BARC: news, chart, profile) and Bank of America (BAC:
bank of america corporation com
Last: 28.57-5.17-15.32%
12:25pm 09/15/2008
Delayed quote data
Sponsored by:
BAC 28.57, -5.17, -15.3%) faltered Sunday, leaving few options for the 158-year-old firm. See related story
"We confirm that Barclays considered a combination with Lehman Brothers and did not proceed because it was not possible to conclude a transaction in the best interests of Barclays shareholders," Barclays said in a statement issued on Monday.
The failure of one of Wall Street's oldest firms came as the fallout from the U.S. housing collapse and global credit crunch intensified more than a year after problems first surfaced.
The International Swaps and Derivatives Association organized a special trading session to reduce financial risk in the event of a bankruptcy filing Sunday. See related story.
Federal officials have been struggling to organize an acquisition or private-sector bailout of Lehman because of fears that a bankruptcy could cause severe problems in the already fragile financial markets.
But they are anxious not to commit any more taxpayer dollars given the massive bailout of mortgage giants Fannie Mae (FNM:
Fannie Mae
Last: 0.62-0.12-15.95%
12:24pm 09/15/2008
Delayed quote data
Sponsored by:
FNM 0.62, -0.12, -15.9%) and Freddie Mac (FRE:
Freddie Mac
Last: 0.40-0.06-13.04%
12:24pm 09/15/2008
Delayed quote data
Sponsored by:
FRE 0.40, -0.06, -13.0%) last week and the guarantees offered to facilitate the rescue of Bear Stearns (JPM:
JPMorgan Chase & Co
Last: 40.03-1.14-2.77%
12:25pm 09/15/2008
Delayed quote data
Sponsored by:
JPM 40.03, -1.14, -2.8%) last spring. See related First Take commentary
Even as Lehman's rescue efforts faltered, Bank of America agreed to acquire Merrill Lynch (MER:
Merrill Lynch & Co., Inc
Last: 20.16+3.11+18.24%
12:25pm 09/15/2008
Delayed quote data
Sponsored by:
MER 20.16, +3.11, +18.2%) . Read the Wall Street Journal article.


http://www.marketwatch.com/news/story/lehman-file-under-chapter-11/story.aspx?guid={50D06AF4-0AD5-4B38-8206-D4C8D6E62EC7}
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