The paper "Problems that Lehman Brothers Faced" is a wonderful example of a case study on management. The significance of the bankruptcy of Lehman Brothers is the global footprint it left behind. There were literally thousands of participants in the financial market directly affected by their collapse. Furthermore, it caused a domino effect due to various cross-border and cross-organisational interdependency. The Lehman liquidation caused over seventy-five separate and distinct bankruptcy proceedings (PricewaterhouseCoopers, 2009). The interdependency of this firm with others in the industry and how they are interrelated is illustrated in Figure 1. Figure 1: Interdependencies between Lehman Brothers and other entities.
Source: PricewaterhouseCoopers, 2009. The collapse of Lehman brothers is viewed by many as a defining moment in financial circles. This is illustrated by the results of a survey conducted by SIFMA in 2008 that asked respondents to list the most significant event of 2008: Figure 2: What event had the most significant impact on the industry in 2008? Source: SIFMA, 2008 This report seeks to ascertain what exactly caused this catastrophic collapse and how they could have been avoided or solved.
The issues will be examined in detail and recommendations made. Issues The effect of the bankruptcy of Lehman Brothers was exacerbated by the intricate nature of its global legal framework. There were several Lehman Brothers entities worldwide as illustrated in Figure 3. These entities did not file for bankruptcy as one. On September 15th 2008, LBHI filed for bankruptcy and caused global chaos which began with Lehman Brothers International (Europe) filing for administration the same morning. This was followed by the appointment of a SIPC trustee for Lehman Brothers Inc on 19th September 2009.
The impact on clients and colleagues was exposure by several Lehman Brothers bodies located in different jurisdictions which had differing bankruptcy and insolvency legislation, contractual protection and remedies (Pricewaterhouse, 2009).
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