By Patrick Fitzgerald
Lehman Brothers Holdings Inc. collapsed more than six years ago,
but the failed investment bank is still paying millions in bonuses
to the team winding down its business.
Lehman, which officially emerged from Chapter 11 nearly three
years ago, paid out $44 million last year in bonuses to employees,
according to a monthly operating report filed Friday with the U.S.
Bankruptcy Court in New York. The bank paid out about $50 million
in bonuses in 2013.
A Lehman spokeswoman wasn't immediately available for comment on
the bonuses.
Since exiting bankruptcy protection, the investment bank has
remained in business, managing a large pool of assets and selling
when it finds a good deal, rather than in a panic. This has
resulted in greater-than-expected recovery for Lehman's
creditors.
The bank's estate has been selling off its real estate and its
private-equity stakes as well as winding down its derivatives'
positions to pay back its creditors. Lehman, in its most recent
estimate, said it expects to bring in $90.6 billion from asset
sales to pay back creditors.
Lehman has previously said it expects to pay its postbankruptcy
employees and other outside professionals about $1.1 billion over
the next three-plus years.
A team of bankruptcy professionals under the direction of
Alvarez & Marsal managed the New York holding company's assets
until Lehman's exit from bankruptcy in 2012, when a reorganized
company emerged, overseen by a new board of directors.
A new board, with executives and directors of businesses and
subsidiaries related to Delphi Automotive PLC, Morgan Stanley,
American International Group Inc. and Capmark Financial Group Inc.,
took over in 2012.
Board members received $5.2 million in incentive payments,
according to court papers. The incentive payments are based on a
sliding scale linked to "value" distributed to unsecured creditors,
the speed of the distributions and the reduction of claims against
Lehman.
Lehman's September 2008 Chapter 11 filing triggered
foreign-bankruptcy proceedings for more than 80 of the bank's
far-flung affiliates. The holding company has reached settlements
on intercompany claims with virtually all of its foreign
affiliates, including those in the U.K., Japan, Switzerland--and
now Germany.
Lehman, once the nation's fourth-largest investment bank,
collapsed in September 2008 and triggered the largest bankruptcy in
history. The investment bank's main business was quickly sold to
Barclays PLC, and the company's brokerage is being unwound
separately under the provisions of the Securities Investor
Protection Act.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
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