Lehman Brothers Holdings Inc *ACCORDING TO PEOPLE BRIEFED ON THE MATTER, LEHMAN WILL FILE FOR BANKRUPTCY PROTECTION ON SUNDAY NIGHT – NYT
– According to the report, Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdins, according to these people.
– A group of banks will provide a financial backstop to help provide an orderly winding down of the investment bank
– The Fed has agreed to accept lower quality assets in return for loans from the government.
– With respect to the bankruptcy filing, Lehman’s filing is not likely to resemble those of other companies that seek bankruptcy protection because of the harsher treatment that federal bankruptcy law applies to financial-services frms.
– NYT adds that changes to the bankruptcy code mean that counterparites to Lehman’s credit default swaps can seize their collateral at any time, posing an enormous potential risk to the entire financial markets.
– Lehman has retained the law firm Weil, Gotshal & Manges to prepare its bankruptcy filing.
– (reminder from earlier today) LEH: NYT speculates Lehman will be forced into receivership after weekend talks fail to materialize
