Lehman Brothers - Chapter 11 Bankruptcy

158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 protection.
Storied brokerage firm Lehman Brothers filed for Chapter 11 bankruptcy protection Monday, the latest casualty of a credit crisis that has rocked Wall Street firms to their core. It is one of the nation's largest corporate bankruptcies ever and is Wall Street's most dramatic failure since Drexel Burnham Lambert in the late 1980s.



Chairman and Chief Executive Richard S. Fuld, who joined Lehman as a college student in 1969 and was the longest serving CEO on Wall Street, now has the dubious task of winding down the company's $639 billion of assets.





Glance on Lehman Histroy -

1840–1859
The history of Lehman Brothers parallels the growth of the United States and its energetic drive toward prosperity and international prominence. What would evolve into a global financial entity began as a general store in the American South. Henry Lehman, an immigrant from Germany, opened his small shop in the city of Montgomery, Alabama in 1844. Six years later, he was joined by brothers Emanuel and Mayer, and they named the business Lehman Brothers.

1858
Cotton was the cash crop of the time, and the Lehmans accepted it from the local farmers as currency to settle accounts. The brothers traded the cotton for cash or merchandise, becoming brokers for buyers and sellers of the crop. In 1858, they opened an office in New York, which was the commodity trading center of the country.

- In recent decades, Lehman was a prominent force in the residential and commercial mortgage finance markets as well as investment-grade and high-yield corporate debt financings.
Lehman's shares were recently trading at 19 cents each; a year ago, they were changing hands at $58.62.

Filing Chapter 11 Bankruptcy

The petition was filed in New York's Southern District Bankruptcy Court, the site of numerous high-profile bankruptcy cases. The judge overseeing the case is James Peck.
According to court documents, Lehman says it has more than 100,000 creditors. Its assets total $639 billion and liabilities total $613 billion. The firm is a major participant in debt and equity markets, investment banking, asset management, and private equity. It is a major force in Europe, the U.S., and Asia. Half of its revenues last year came from overseas business operations.

Chapter 11?

The US bankruptcy code 11 is usually the path taken by organizations, when faced with crippling debt. Code 11 gives the organization ample time to restructure its assets and attempt a profitable start.
When a troubled business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11.
In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors.
A chapter 11 filing is usually an attempt to stay in business while a bankruptcy court supervises the "reorganization" of the company's contractual and debt obligations


Corporations survived thru Chapter 11 filing -


K-mart is one of those organisation which has been recouped back as an vital enterprise focused on delivering value to customers and stakeholders alike.
With more than 1,500 stores in convenient locations across the nation, the Caribbean and Guam, and $25 billion in annual sales, Kmart remains well positioned to compete effectively in the discount retail sector.

On May 6, 2003, Kmart Corporation and 37 of its U.S. subsidiaries and affiliates emerged from the Chapter 11 process after concluding a fast-track reorganization. These entities had filed voluntary petitions for Chapter 11 protection in the United States Bankruptcy Court for the Northern District of Illinois on January 22, 2002. The Company’s First Amended Joint Plan of Reorganization, as modified, was confirmed by an order of the Court dated April 23, 2003.
Kmart achieved several important objectives during the 15-month reorganization period. These include strengthening its balance sheet and significantly reducing debt; securing $2 billion in exit financing; focusing its store portfolio on the most productive locations and terminating leases for closed stores; and developing a more disciplined, efficient organization and lowering its overall operating costs.
Kmart emerges from Chapter 11 as a new and vital enterprise focused on delivering value to customers and stakeholders alike. Its focus going forward will be on continuing to revitalize its business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and enhancing asset productivity. Kmart’s associates are facing the future with new energy and enthusiasm -- and a renewed commitment to providing customers with compelling promotional values, great private brands and excellent service.