Latest from GIFC

Saturday, 15 November 2008

Lehman administrators' task will dwarf Enron, creditors told

Administrators grappling with the European arm of the failed investment bank Lehman Brothers have told creditors their task is "10 times as big and as complicated" as the unwinding of Enron.
Speaking after the first creditors' meeting, a team from PricewaterhouseCoopers said they had identified more than $1tn (£670bn) in assets and liabilities that need to be accounted for.
At the meeting, held behind closed doors in a conference hall at the O2 dome in London, the lead administrator, Tony Lomas, told hundreds of representatives and lawyers that he had recovered about $5bn out of a potential $550bn of obligations owing to creditors. A further $22.3bn of client assets had been identified, all of which will be returned to their owners.
He drew a comparison with the US energy-trading group Enron, which collapsed in 2001, noting that some of his colleagues are still working on unresolved elements of that administration.
Lomas said the administration was already behind schedule because of delays in receiving confirmation from third parties believed to be holding assets of Lehman Brothers International (Europe).
"The balance sheet position will be north of $1tn and we've got a long way to go before knowing what the position is for creditors," Lomas said after the meeting. "The prospect is that some creditors will lose money. How much? We can't determine that for a significant time."
PWC has already identified more than 400 trade creditors to Lehman's European business, including Reuters, HSBC, Hewlett-Packard, BT, the London Stock Exchange and Lufthansa. Even PWC itself is listed among those owed money by the collapsed firm, as are the Bank of England and the Financial Services Authority.
The parent company Lehman Brothers Holdings, once America's fourth-largest bank, was forced to file for bankruptcy protection in the US in September after investors lost confidence in the business and the quality of assets on its balance sheet. It had been one of the most active players in sub-prime home lending.
The settlement of Lehman credit insurance contracts linked to the bank's bonds suggested debt holders could expect to recover less than nine cents in the dollar.
About 1,500 Lehman staff in Europe lost their jobs or resigned as the bank went bust. A further 2,500, mainly at the group's Canary Wharf offices, became employees of the Japanese bank Nomura, which bought the European and Middle Eastern equities and investment banking operations out of administration.

Alfalah Consulting - Kuala Lumpur:
Consultant/Speaker/Motivator : 
Islamic Investment Malaysia:

No comments:

Upcoming Events on Islamic Finance, Wealth Management, Business, Management, Motivational Alfalah Consulting, KL-Malaysia:


Register Online . Register Today

Islamic Financial Planning & Wealth Management by Ahmad Sanusi Husain