David, you should write this up in more detail. I assume none of the
press will present a coherent story.
I suspect that bankruptcy law might be one of the most interesting
places to be at this moment.
David B. Shemano wrote:
I thought I would share that in my capcaity as a bankruptcy lawyer, I listened
to today's hearing in the Lehman bankruptcy case, which included an extensive
report to the Judge. We represent three different entities who were
counter-parties to Lehman on either credit default swaps or power trades. When
Lehman filed, most of the counter-parties terminated all contracts and then
netted them out. If you determined you were owed money, you sent a demand
letter. If you owed money, you did nothing.
Lehman reported today that it is a party to about 1.5 million derivative
transactions with over 8,000 counter-parties. The immediate problem
counter-parties have is that they provided collateral for the transactions and
nobody knows where the collateral is. Lehman doesn't really know because
substantially all of the employees with institutional knowledge transferred to
Barclays when the brokerage unit was sold. Lehman has hired Alvarez & Marsal
(probably the largest provider of financial restructuring services in the world) to
staff old Lehman, but it is going to take at least 45-60 days for them to get a
handle on the data to provide any information. And once they do get up to speed,
they are going to have to go out and hire people with expertise to evaluate all of
the swap transactions to reconcile them. Quite the mess and very challenging
issues for bankruptcy lawyers and the bankruptcy system.
David Shemano
--
Michael Perelman
Economics Department
California State University
Chico, CA
95929
530 898 5321
fax 530 898 5901
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