Friday, 9 March 2012

Greece, Lehman Brothers and Bankruptcy

By Sevi Tsimaki
It is well known that the collapse of Lehman Brothers caused financial turbulence and for many, this was the beginning of the global recession. There have been many associations between Lehman Brothers and Greece. Many journalists and politicians have compared the Greek economic recession to that of LB. In some cases, they were so sure of their words, that they caused misconceptions. However, this was and is a misleading comparison.
Lehman Brothers collapsed within a night, while the Greek government had a lot of time to prepare for the economic problems it was going to face. Plus, the LB, by collapsing, revealed flaws of the US mortgage market. And the differences go on and on. It is neither safe nor smart to compare institutions to countries.

Lehman Brothers finally emerged from their bankruptcy earlier this week. Lehman Brothers, which collapsed in 2008, will now be able to pay its creditors from April 17th and onwards. Their debt is around $65 billion dollars. The assets the company has in its hands right now amount to $10 billion dollars. The second payment will take place in September 2012. Lehman was the fourth largest investment company of Wall Street. Their bankruptcy was the biggest the U.S. has ever experienced.
Every time there is an economic recession of a country, after a few months or maybe years, the country will start emerging from the recession. Taking this into account, steps towards this direction will be taken to support the reboot of the economy. The support Greece has, should keep us optimistic that we will emerge from the difficult situation we are in.
John Suckow, president of Lehman Brothers, announced that they are proud they are no longer part of Chapter 11 of the Bankruptcy code. He is optimistic that the company will be able to pay its debt back to the creditors. The case however, will not be dropped as easily. There are many lawsuits against Lehman Brothers, and the court battles will continue for years. The company is now free to operate again and able to sell its assets without a court permission.

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