The biggest bankruptcy in history saw the beginning of the end on Tuesday, as the reorganization plan of Lehman Brothers Holdings Inc. to exit bankruptcy in early 2012 was granted approval by U.S. Bankruptcy Judge James Peck. The firm declared bankruptcy in September 2008, taking the financial crisis to a new level.
Reuters reported that Peck granted approval for Lehman to exit bankruptcy no earlier than Jan. 31, with payouts to creditors to begin in 2012. Depending on the type of debt, unsecured creditors will receive between 21 and 28 cents on the dollar. Stockholders will get nothing.
All that remains of the formerly huge investment bank and brokerage is a collection of assets including real estate, private equity and banking investments. The sum of $65 billion remains out of an original asset base of $639 billion at the time of the bankruptcy declaration; that $65 billion will be returned to creditors possessing some $450 billion in claims. That group includes debt investors and trading partners from before the bankruptcy, such as Goldman Sachs. Fees for advisors and attorneys for the bankruptcy have totaled about $1.5 billion.