Finance & Loans

A lesson from Lehman bankruptcy

Emerging from a bankruptcy is hard for individuals as well as companies. A lesson can be learned from the now famous Lehman Brothers bankruptcy.

In 2008, Lehman Brothers Holdings was the nation’s fourth largest bank with over $300 billion assets including deposits from investors. It had its headquarters in its own 32-story building on Seventh Avenue in New York’s Manhattan. Lehman was into many businesses. Its empire collapsed in the wake of the financial crisis in September 2008. It was the largest ever bank failure in the U.S. history. Lehman bankruptcy sent the credit markets on a tail spin and sending the U.S. economy into an economic slump only behind the Great Depression. Claims against the bank are over $300 billion and over the next six years or so, depositors are expected to receive 18 cents on the dollar.

One big reason for lower payback estimate is its real estate holdings. Lehman has a $7.7 billion real estate portfolio including Archstone, a developer and operator of apartments across the nation.

Bank operated within the guidelines and therefore, no criminal activity has been leveled against any officials of Lehman. Lehman emerged from the bankruptcy in March 2012.