Lehmans Unsecured Creditors Would Not Have Received Greater Returns Under Orderly Resolution Authority According to Latest ABI Quick Poll
Contact: John Hartgen
LEHMAN’S UNSECURED CREDITORS WOULD NOT HAVE RECEIVED GREATER RETURNS UNDER 'ORDERLY RESOLUTION AUTHORITY,” ACCORDING TO LATEST ABI QUICK POLL
July 1, 2011, Alexandria, Va.— Even if 'orderly resolution authority' had been in place for the Lehman bankruptcy, the case would not have produced a greater return to unsecured creditors, according to a majority (51 percent) of respondents to ABI’s latest Quick Poll. Twenty-eight percent “strongly disagreed” and 23 percent “disagreed somewhat” that the case would have produced a greater return to unsecured creditors had “orderly resolution authority” been in place for the Lehman bankruptcy.
On Sept. 15, 2008, Lehman Brothers filed the largest bankruptcy in U.S. history with over $600 billion in listed assets. Lehman's filing resulted from exposure to risky investments in housing-related assets that cratered during the mortgage crisis. At the time of its filing, investment banks such as Lehman were not subject to the same regulations applied to depository institutions to restrict risk-taking activity. The Dodd-Frank Act was signed into law in 2010 in response to the financial crisis and to prevent failures of 'too big to fail' institutions. Title II of the Dodd Frank Act set out the process of 'orderly liquidation authority' that enables the government to liquidate covered financial companies, including non-bank and insurance companies.
Thirty-three percent of respondents thought that unsecured creditors would have received a greater return if “orderly resolution authority” had been in place for the Lehman bankruptcy. Thirteen percent did not know or had no opinion on the poll question.
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.