Lehman - Managing Bankruptcy

On October 24, 2008, Lehman stated that its workforce was comprised of about 140 employees and a team of about 125 from restructuring firm Alvarez & Marsal. One of the firm's (Alvarez & Marsal) founders, Bryan Marsal, is serving as chief restructuring officer of Lehman.

Barclays PLC, which bought the company's core US assets last month, has continued the employment of more than 9,000 Lehman workers. Barclays and Lehman have a transition services agreement whereby former employees of the investment bank will help it wind down its business.

But Lehman said in court documents on Thursday that those employees are unable to devote the time and resources necessary to help Lehman wind-down its businesses. Lehman wants permission from the court to hire additional workers quickly to avoid the risk of losing information that would help it unwind thousands of complex derivative transactions. Lehman said it was seeking to hire former Lehman workers because the tasks to unwind the business require specialized knowledge.

Lehman's lead bankruptcy attorney Harvey Miller informed the court that it may request higher payment schemes for these employees than bankruptcy courts are used to. The "transactions involved necessitate the employment of individuals with very specific skill sets, and preferably, former Lehman employees who possess the expertise and experience necessary to efficiently administer and wind-down the Debtors' businesses and the subject transactions,"

The estimate for the total base salary for 620 employees, including an additional 480,is $96 million. The employees would be eligible to earn a bonus. Lehman said the total amount of bonuses to be issued would not exceed $110 million.

Lehman also asked for approval to set aside severance benefits of $22.5 million for employees that are involuntarily let go. It said employment contracts would have initial commitment periods ranging from three to 24 months.

References

http://economictimes.indiatimes.com/articleshow/3656684.cms