Lehman Brothers Holdings Inc is a business again two years after declaring the biggest bankruptcy in history, with billions of dollars in cash, 500 employees, real estate and investments in other bankruptcies.
The defunct New York-based investment bank, being run by Bryan Marsal, has almost $20 billion in cash and a monthly payroll of up to $45 million for managers and advisers. Hard-to-sell investments are being managed by 400 employees, and the firm is spending tens of millions of dollars on litigation set to stretch to at least 2012.
Lehman’s strategy is unusual for a bankrupt company that’s liquidating. Marsal, 59, is betting that he’ll raise twice as much by holding Lehman’s worst-performing investments as he would by conducting a fire sale.
“The liquidating estate is acting like an ongoing investment concern,” said Lawrence A Larose, a lawyer with Winston & Strawn’s financial-restructuring practice in New York. “It’s trying to slowly extricate itself from these billions of dollars of investments around the world.”
Marsal is not only pouring cash into distressed assets he inherited. He spent $1.4 billion to buy a bankrupt affiliate’s loans on a bet he could sell them at a profit.
Creditors haven’t pushed Marsal to “dump these assets into a very questionable market,” Larose said.
Lehman, once the fourth-largest investment bank, with assets of $639 billion, floundered on September 15, 2008, because of risky real estate bets and too much debt, which it tried to hide from investors, according to a report by examiner Anton Valukas.
“There was a bunch of stuff no one wanted to buy,” said Chip Bowles, a bankruptcy lawyer at Greenebaum Doll & McDonald in Louisville, Kentucky, who has written articles on Lehman.
Marsal has been Lehman’s chief executive officer since 2008. His restructuring firm, Alvarez & Marsal, has earned $326 million from Lehman through July.
