City A.M. Reporter
THE trustee holders of collapsed Lehman Brothers’ senior bonds said the debt holders may be owed as much as $73bn (£44bn), after losing their investments when the bank filed for bankruptcy protection a year ago, according to court documents.<br /><br />Wilmington Trust Company claims that holders of the senior debt of the failed bank are estimated to be owed between $49bn and $73bn.<br /><br />In addition, bondholders may seek payments on unpaid interest, costs and damages associated with Lehman’s failure.<br /><br />Lehman’s estate is facing a number of claims from creditors including bondholders, derivatives counterparties, states, towns and individuals ahead of a 22 September deadline for final claims.<br /><br />Administrators of the London arm of Lehman Brothers said last month additional claims it is handling against the collapsed Wall Street bank could total as much as $100bn. <br /><br />Unsecured creditors to the failed bank are expected to recover only a small portion of the money owed, due to the large number of claimants, low value of many of Lehman’s assets and the complexity in unwinding the bank’s operations, analysts said.<br /><br />“The accounts were way overstated, the value of assets on Lehman’s books were far greater than most people expect,” said Sean Egan, credit ratings agency managing director for Egan-Jones Ratings.<br /><br />Unsecured Lehman claims are trading at around 20 cents on the dollar, said participants in the market.<br /><br />Also, New York State claims it is owed around $1.2bn in unpaid taxes and interest from bankrupt Lehman Brothers, the largest individual claim to date against the failed bank, according to the same court documents.<br /><br />New York claims it is owed fees for a mixture of corporate taxes dating back to 1994.<br /><br />Cash-strapped cities and states including New York, the City of Chicago and Long Beach, California have all submitted claims to retrieve money from the estate of Lehman, which collapsed in September 2008.<br /><strong><br />TIMELINE: THE DEATH OF LEHMAN BROTHERS</strong><br /><strong>22 August 07</strong><br />Lehman Brothers, led by chief executive Dick Fuld, closes its sub-prime mortgage business, with the loss of 1,200 jobs.<br /><br /><strong>17 January 08</strong><br />Lehman says it will no longer originate mortgages as real estate and housing markets suffer.<br /><br /><strong>16 March 08</strong><br />Bear Stearns is rescued in a joint bailout by the government and JPMorgan Chase. <br /><br /><strong>9 June 08</strong><br />Lehman says it has lost $3bn in the second quarter and that it will raise $6bn in new capital.<br /><br /><strong>7 September 08</strong><br />US government takes twin mortgage giants Fannie Mae and Freddie Mac into conservatorship.<br /><br /><strong>8/9 September 08</strong><br />Any chance of Korea Development Bank (KDB) buying 25 per cent of Lehman appear to have evaporated as it walks away. Lehman shares nosedive 52 per cent.<br /><br /><strong>10 September 08</strong><br />Lehman says it has lost $3.9bn in the third quarter, but will move to bolster its balance sheet with a capital-raising intiative.<br /><br /><strong>11 September 08</strong><br />Shares in Lehman fall another 42 per cent as recovery plans fail to convince investors. Lehman looks to rivals for a rescue.<br /><br /><strong>13 September 08</strong><br />Late night meetings involving potential rescuers such as Barclays fail to find a bank willing to take on the floundering Wall Street institution.<br /><br /><strong>15 September 08</strong><br />After a weekend of negotiations, no rescuer can be found for Lehman Brothers, which files for bankruptcy. Credit markets freeze and stocks plummet around the world. Merrill Lynch is rescued by a merger with Bank of America.<br /><br /><strong>16 September 08</strong><br />Barclays snaps up Lehman Brothers’ North American operations for $1.75bn, grabbing its headquarters in the process.<br /><br /><strong>17 September 08</strong><br />US Federal Reserve rescues mammoth insurer American International Group (AIG) with a $85bn credit line. Lloyds TSB agrees a deal to buy struggling rival HBOS, with the blessing of the government.<br /><br /><strong>22 September 08</strong><br />Japanese bank Nomura buys Lehman’s EMEA operations for a nominal fee of $2.<br /><br /><strong>3 October 08</strong><br />The $700bn Troubled Asset Relief Programme (Tarp) is signed into law by President Bush, as Wells Fargo and Wachovia merge.<br /><br /><strong>26 February 09</strong><br />As the world’s banks suffer from the Lehman fallout, Royal Bank of Scotland posts a UK record loss of £24.1bn.<br /><br /><strong>14 September 09</strong><br />In a speech on the one-year anniversary of Lehman’s bankruptcy, President Barack Obama says “reckless behaviour” must end, and calls on bankers to learn the lessons of Lehman’s collapse.<br /><br /><strong>TOP 3 WINNERS</strong><br /><strong><br />BOB DIAMOND<br />CHIEF EXECUTIVE BARCAP<br /></strong>Even as Barclays was turning its nose up at a full rescue of the Lehman Brothers, its investment banking division Barclays Capital, led by Bob Diamond (left), was preparing to buy up its core US assets.<br /><br />Barclays bought Lehman's North American investment banking and trading unit for $250m (£150m), and paid $1.5bn for its New York headquarters and two data centres, massively increasing its USpresence.<br /><br /><strong>KENICHI WATANABE<br />CHIEF EXECUTIVE NOMURA</strong><br />The Japanese bank was perhaps the biggest winner from the fall of Lehman Brothers. Nomura snapped up the investment bank’s European, Middle Eastern and Asian operations for a nominal fee of $2, giving it a long-awaited opportunity to ramp up its equities and investment banking operations internationally. Nomura chief executive Kenichi Watanabe described the Asian acquisition in particular as “transformational”.<br /><br /><strong>DAVID EINHORN<br />PRESIDENT, GREENLIGHT CAPITAL<br /></strong>For those who saw the impending demise of Lehman before it happened, there was plenty of money to be made. Hedge fund guru David Einhorn, president of hedge fund Greenlight Capital, began shorting Lehman Brothers towards the end of 2007.<br /><br />He is believed to have made some $3.1bn from the collapse of the bank and his long-term bearish stance was used by some to blame shorting for Lehman’s woes.