Lehman Brother says it intends filing for bankruptcy later tonight, Australian time, after attempts to sell all or part of it failed.
In a statement on its website and issued just after midnight, US East Coast time, the firm said it plans to make the Chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York.
The firm said the filing will be by the holding company and won’t include any of its subsidiaries. That means customers accounts and assets are protected from being included in the collapse. Lehman said it is still is exploring the sale of its broker-dealer operation and continues to hold talks on the sale of its asset-management unit.
None of the broker-dealer subsidiaries or other subsidiaries of LBHI will be included in the Chapter 11 filing and all of the broker-dealers will continue to operate. Customers of Lehman Brothers, including customers of its wholly owned subsidiary, Neuberger Berman Holdings, LLC, may continue to trade or take other actions with respect to their accounts.
The Board of Directors of LBHI authorized the filing of the Chapter 11 petition in order to protect its assets and maximize value. In conjunction with the filing, LBHI intends to file a variety of first day motions that will allow it to continue to manage operations in the ordinary course. Those motions include requests to make wage and salary payments and continue other benefits to its employees,” Lehman said in the statement.
Neuberger Berman, LLC and Lehman Brothers Asset Management will continue to conduct business as usual and will not be subject to the bankruptcy case of its parent, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors.
Earlier, US regulators moved to protect customer assets held by Lehman as Wall Street’s fourth biggest investment bank headed for collapse after the bailout talks failed.
The main stockmarket regulator, the Securities and Exchange Commission said it was “taking actions to ensure that customers of Lehman Brothers Inc., the US regulated broker-dealer subsidiary of Lehman Brothers Holdings Inc., which holds the accounts of Lehman’s US securities customers, will not be adversely affected by recent market events.”
The SEC said in a statement that it would enforce rules requiring “segregation of customer securities and cash,” as well as insurance protection by the Securities Investor Protection Corporation (SIPC).
The SEC said it was “coordinating with overseas regulators to protect Lehman’s customers and to maintain orderly markets.” It was in contact with regulators in Britain, Germany, Japan and elsewhere.
Lehman Brothers operates in Australia where it bought Grange Securities in 2007.
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