Lehman Brothers Holdings Japan started bankruptcy protection proceedings in Tokyo today. Under Japanese law, Lehman Japan will be “prohibited from payment of obligations based on the causes [that] arose on or before September 15, 2008, excluding certain exceptions”, the bank said in a statement issued this morning.
This action in the Tokyo District Court follows the announcement by parent company Lehman Brothers in New York yesterday that it would seek bankruptcy protection in the US. The decision to start rehabilitation procedures under the Japan Civil Rehabilitation Law was taken by the board of Lehman Brothers Japan on Tuesday.
The bank is expected to sell most of its businesses. The parent company in New York is reportedly scrambling to sell off assets that retained value. These could be its broker-dealer operations, its Neuberger Berman asset management unit and parts of its investment banking arm. Executives at its private equity division are believed to be considering a management buyout of the unit in case the sale of the asset management business falls through.
The Financial Services Agency, Japan’s market watchdog, issued Lehman Brothers with an order on September 15 to suspend all “financial instrument business”, except for transactions relating to the performance and closing of existing agreements entered into on or before September 12, and the return of assets deposited by customers between September 15 and September 26.
To ensure the rehabilitation procedures are carried out in an orderly manner and all creditors are treated fairly, the firm will work with the Japanese regulatory authorities and is ascertaining its financial position, Lehman Brothers said. The firm will suspend settlement of existing contracts before its true financial position can be ascertained, the bank added.
Topics: Lehman Brothers
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