Who: Martha Solinger, Co-General Counsel, Lehman Brothers Holdings
Where: Bombay Palace, 30 West 52nd Street, New York
When: June 25, 2009
On the Menu: Chicken curry and financial catastrophe
Last August, Martha Solinger, then head litigator, insurance and intellectual property, at Lehman, kindly agreed to chat about career prospects with a family friend who had just graduated from the University of Michigan, which happens to be her own alma mater. By the time he came to New York a week later, there were no job openings at Lehman. In fact, the financial giant with a truly global reach and a 160-year history no longer existed.
Few people were more surprised by what happened than Lehman’s senior management. “At the start of that week, the thought of bankruptcy never occurred to me or to any of my colleagues,” says Solinger. It did seem a remote possibility even as late as September 10, 2008, when Lehman reported a loss of nearly $4 billion.
By the middle of that week, as the company’s share price continued to plummet, it became clear that some assets would have to be sold off, such as the asset-management business Neuberger Berman. As the week drew to a close, it looked like the entire company would be taken over by Bank of America, Barclays or another institution. However, by Sunday, when no deal could be arranged, bankruptcy suddenly had become the only option.
There we had it, in a blink of an eye, the largest bankruptcy in the annals of economic history, involving a mind-boggling $613 billion in debt.
Could Be Even Worse
Needless to say, in the early days of what Solinger calls “the new world,” there was tremendous confusion and little understanding of what was going on. Employees didn’t know whether they would be paid and whether they still had their health insurance and other benefits. Solinger called in her staff and encouraged them to wait for the smoke to clear. Other department heads, equally at sea, suggested to their employees to pack up and go home.
Although some people who lost their jobs in the bankruptcy are still unemployed, overall job losses were not as severe as could have been expected, says Solinger who after 21 years at Lehman had numerous friends and long-time associates at the company. Barclays bought Lehman’s core business along with its global headquarters in Manhattan. Although a number of brokers ended up leaving the new parent — and eventually many positions were cut as well — at least initially around 10,000 U.S.-based jobs were saved. Some 500 former Lehman people currently work with Solinger for the Lehman Brothers Holdings bankruptcy estate, managing the company’s remaining assets and supervising the bankruptcy.
During the fateful week in mid-September, Solinger and her staff were not directly involved in the last-ditch effort to save Lehman. To relieve nervous tension, some employees set up a roulette board on the wall with the names of potential rescuers or future owners. When Richard Fuld, Lehman chairman, was called to testify to Congress a week after the bankruptcy, Solinger began working with him on his testimony, which became her first post-bankruptcy assignment. Since then, for almost a year, she has been sharing the duties of the Lehman estate’s chief legal counsel.
She’ll be doing this for a lot longer.
“It is a measure of the sheer size of this bankruptcy that even now, almost a year after the event, it is still difficult to see where this thing is going and what shape it will take,” admits Solinger.