Lehman Brothers Holdings Inc.'s filing for bankruptcy protection in September destroyed as much as $75 billion of potential value to creditors, according to an internal analysis by the company's restructuring advisers cited in today's Wall Street Journal.
If the company hadn’t rushed into a Chapter 11 filing, it likely would have preserved tens of billions of dollars of value, according to a study by Alvarez & Marsal Holdings LLC, a New York-based management consulting firm.
An orderly bankruptcy filing — which would have allowed for the sale of assets before filing for bankruptcy protection — would have given the firm time to try to unwind its derivatives portfolio in a way that might have preserved value, according to the study.
While it is too soon to say how much Lehman creditors will recover in the bankruptcy process, unsecured creditors have asserted in court filings that they are owed about $200 billion, according the Journal.
The bond market is projecting a recovery of about $20 billion, or about 10 cents on the dollar, for these creditors, the report stated.
Lehman filed for bankruptcy protection Sept. 15 after the government declined to bail it out and negotiations to save the bank from a collapse fell through.
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