Judge okays Lehman Bros' restructuring plan

A New York judge on Thursday approved a plan by the Lehman Brothers estate to form an asset management company that would represent a new beginning for the defunct investment bank Lehman Brothers Holdings Inc, whose collapse was one of the triggers of the 2008 global financial crisis.

The group will split into an asset management company, to be called Lamco, which is to mange Lehman's remaining assets for its creditors for five years, and another company to handle its 2008 bankruptcy. Lehman hopes to thereby increase the money repaid to creditors.

Lamco will be staffed by current members of the team overseeing the bankrupt Lehman Brothers Holdings estate. It would indefinitely manage Lehman's remaining derivative contracts and real estate and private equity investments.

Lehman argued successfully in court that by holding the assets for a longer period of time than was typical in a bankruptcy, it could ultimately increase the money repaid to creditors. Lamco can also manage money for other groups, collecting new fees. The approval came after Lehman resolved earlier objections from derivatives creditors led by Goldman Sachs.

Lehman's US investment banking group was sold to Barclays right after its bankruptcy filing (See: Barclays in talks to acquire Lehman's securities business)

Judge James Peck, of the southern district of New York bankruptcy court, said he had "never seen anything quite like this" but trusted "the apparent business judgment that there are significant upside opportunities to be realised from this structure".