Sale of the Century-Five Days in September

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In September 2008 Lehman Brothers Holdings Inc. and Lehman Brothers Inc. (collectively, “Lehman”) sold their historically coveted brokerage business to Barclays Capital Inc. Many believe the sale was necessary to prevent a worldwide economic meltdown given Lehman’s tentacles throughout the global economy. In fact, Lehman’s Chapter 11 filing on September 15, 2008 was valued at $639 billion, the largest Chapter 11 in U.S. history. It involved 7,000 legal entities and spawned 75 related insolvency proceedings throughout the world. Despite (or perhaps because of) the enormity of the Lehman Chapter 11, the sale of Lehman’s brokerage business was accomplished in 5 days, an unprecedented accomplishment given the size, importance and complexity of the assets being sold and the transaction itself. Lehman proceeded under Section 363 of the U.S. Bankruptcy Code (regarding sales of assets) to effect this transaction. However, the sale had none of the usual procedures and protections normally associated with a Section 363 sale. The sale followed an extremely truncated process involving only 5 days from Lehman’s Chapter 11 filing to the closing of the sale.

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