Chapter 11

REAL EXAMPLE: LEHMAN BROTHERS

Events breakdown (YEAR

2008)

Lehman faced an unprecedented loss due to the

continuing subprime mortgage crisis.
Lehman's loss was apparently a result of having
held on to large positions in subprime and
other lower-rated mortgage tranches when
securitizing the underlying mortgages.
In the first half of 2008 alone, Lehman stock
lost 73% of its value as the credit market
continued to tighten
On September 13,Geithner, then president of
theFDNYcalled a meeting on the future of
Lehman, which included the possibility of an
emergency liquidation of its assets.Lehman
reported
that
it
had
been
in
talks
withBoAandBarclays.
Lehman Brothers filed for Chapter
bankruptcy protection on September 15

11

Lehman Brothers Holdings

NYSE Share Quote

Bankruptcy filing
September 15: U.S. Bankruptcy Court, Southern District of New York
(Manhattan)
September 22: proposal to sell the brokerage part of Lehman Brothers
holdings of the deal, was put before the bankruptcy court, with a $1.366
billion plan forBarclaysto acquire the core business (mainly Lehman's
$960 millionMidtown Manhattanoffice skyscraper), was approved.
Manhattancourt bankruptcy Judge James Peck, after a 7 hour hearing,
ruled: "I have to approve this transaction because it is the only available
transaction. Lehman Brothers became a victim, in effect the only true
icon to fall in a tsunami that has befallen the credit markets. This is the
most momentous bankruptcy hearing I've ever sat through. It can never
be deemed precedent for future cases. It's hard for me to imagine a
similar emergency."