Lehman Brothers bankruptcy

Lehman Brothers Holdings In said it plans to file for bankruptcy protection, but the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman.

Lehman Brothers declared bankruptcy Monday and Merrill Lynch announced a rescue sale in a series of dramas in the US financial system which hit European stocks as soon as trading began.

                   Photo : AFP

The stunning fall of Lehman Brothers, one of the highest profile investment institutions, came after a frantic weekend marking a dangerous new chapter in the financial crisis sparked by failings in the subprime home-loan market.

In Frankfurt, the European Central Bank said it was ready to intervene again on the money market.

A group of banks set up a 70 billion dollars global emergency fund and reports said insurance giant AIG had asked for a 40-billion-dollar loan to ward off its own disaster.

The US Federal Reserve also acted with an easing of collateral for the provision of loans to avert systemic breakdowns; and the events immediately shook European stock markets.

Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.

 

Bankruptcy represents the end of a 158-year old company that survived world wars and the collapse of Long-Term Capital Management but could not survive the global credit crunch.

 

Investors in recent weeks had grown increasingly jittery about Lehman’s $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.

News Courtesy by Reauters