Nearly three years after the spectacular bankruptcy of U.S. investment bank Lehman Brothers, creditors are closer to getting some form of compensation for the funds they lost.
However, they will need to accept heavy losses: they would only get back around 20 cents for every dollar they had invested in the bank. Investors have until Nov. 4 to decide whether this is a satisfactory settlement.
U.S. Judge James Peck cleared Tuesday all outstanding hurdles in the way of the payback plan. In so doing, he opened the door to the definitive liquidation of the once-so-powerful bank.
The Lehman Brothers bankruptcy in September 2008, the largest in history, shocked the markets and gave free rein to a global financial crisis.
Since the bank filed for Chapter 11 protection, its managers under bankruptcy proceedings have been seeking a way to liquidate the bank's remaining assets. Obscure flows of funds and a complex network structure including many subsidiaries have made the process difficult.
In total, Lehman Brothers estimated that creditors would seek compensation for $322 billion they invested in the bank. Under the proposed plan, it will pay back about $65 billion.
Several powerful creditors have already expressed their willingness to accept the bankruptcy payback proposal.
