New York: Lehman Brothers Holdings Inc said on Wednesday it hoped to exit bankruptcy protection in the next 18 to 24 months, but the judge overseeing the case warned that more international coordination would be necessary to meet that goal.
“We would like to be out of this situation with in 18 to 24 months,” Bryan Marsal, the co-founder of turnaround firm Alvarez & Marsal and current chief executive of Lehman, said at a bankruptcy court hearing in Manhattan.
“Too many people are saying this case is going to take five to six or 10 years. There’s no reason for this thing to be in bankruptcy for that amount of time,” Marsal said.
Marsal has been heading a team of more than 500 to wind down operations at Lehman and said he believes the situation there is now “stable,” compared with the chaos that occurred at the 150-year-old firm when it filed for bankruptcy on 15 September.
But US bankruptcy Judge James Peck, who also on Wednesday approved the appointment of an examiner to probe the investment bank’s collapse, warned that Lehman would have to think globally to meet such a speedy timeline.
Peck said that, with dozens of insolvency proceedings pending around the world, the Lehman case is “undoubtedly the most massive cross-border insolvency in the history of the world,” and told lawyers they should work out protocols for global issues and creditor claims to be resolved efficiently.
Lehman’s bankruptcy attorney, Harvey Miller, said at the hearing that the firm has been working closely with the Lehman Brothers unit in Europe and its administrators.
Marsal took over as Lehman CEO this month after serving as the firm’s chief restructuring officer for months.
As part of a status update to the court, Marsal said that, after sales of Lehman’s core US brokerage unit, money manager Neuberger Berman, and several other assets, the company is focused on an orderly wind-down.
Marsal said Lehman had a cash balance of about $6 billion as of 2 January, compared with about $3.3 billion on 14 Septamber, the day before it filed for bankruptcy protection.
Marsal said Lehman is working to maximize the recovery value of the firm’s assets, by resolving its derivatives book, other claims and funding commitments, and looking to sell hard assets such as real estate, art and Lehman’s fleet of planes.
When Lehman filed for bankruptcy, it listed $613 billion in debts and $639 billion in assets.
The examiner is expected to produce a report on the issues surrounding how Lehman collapsed; how it pursued the sale of key assets such as its core US brokerage business to Barclays Plc; and look for any evidence of fraud, dishonesty, or misconduct, lawyers said at the hearing.