&--Monday, September 15, 2008 ; 10:10 PM
EldwinSchrodinger @ Lehman Brothers set to file for bankruptcy
EldwinSchrodinger @ Lehman Brothers set to file for bankruptcy
loving you always ♥
ONE of the world's biggest investment banks has today said that it will file for bankruptcy in a move that will spread further unease about the state of global economies.
American financial giant Lehman Brothers is to file a petition under Chapter 11 of the US Bankruptcy Code. The move usually allows companies to reorganise their contractual and debt obligations under the supervision of a bankruptcy court.It follows the collapse of talks to secure a rescue deal for Lehman Brothers, one of Wall Street's oldest investment banks.
UK bank Barclays admitted that it had considered a bid for the company but decided not to proceed because it would not have been in the best interests of shareholders.
Lehman has suffered billions of dollars worth of losses in the US mortgage markets and was unable to find an investment partner to throw it a lifeline.
The firm said it was still pursuing the sale of its broker-dealer operations, as well as its investment management division.
Another subsidiary, Lehman Brothers Asset Management, will also not be subject to the petition.
Lehman said in a statement: "The board of directors of Lehman Brothers Holdings International authorised the filing of the Chapter 11 petition in order to protect its assets and maximise value."
The group racked up a third quarter net loss of $3.9 billion (£2.2bn) after a $7bn (£3.9bn) hit from commercial property and sub-prime mortgage losses.
Lehman's share price tumbled 90 per cent last week in the wake of its poor third-quarter results and amid investor concerns that the battered bank was running out of options to raise capital.
In the UK, Lehman employs staff at its regional headquarters in Canary Wharf, London, as well as its office in High Wycombe, Buckinghamshire. Globally, the group has around 25,000 staff.
As Lehman Brothers edged towards collapse, US and foreign banks announced plans to put in place a $70bn (£39bn) lifeboat credit fund to help shore up financial markets. The consortium includes Barclays, Bank of America, Citibank and Credit Suisse.
They have agreed to create a "collateralised borrowing facility" of $70bn, with each bank contributing $7bn (£3.9bn) to help ease access to credit.
Barclays said it ruled out a Lehman Brothers bid as not being in shareholders' interest.
In a brief statement, the bank said: "We confirm that Barclays considered a combination with Lehman Brothers and did not proceed because it was not possible to conclude a transaction in the best interests of Barclays shareholders."
In a separate move to help shore up the financial markets, Bank of America has announced a 50 billion US dollar (£28bn) deal to buy Wall Street giant Merrill Lynch, which has also been stung by the credit crunch.
The acquisition follows negotiations between the firms and the US Government, which was eager to minimise the damage from the Lehman fallout.
