Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 bankruptcy protection from its creditors on Monday and said it was trying to sell off key business units, AP reported. The filing was made in the U.S. Bankruptcy Court in the Southern Disctrict of New York. The case had not yet been assigned to a judge. Lehman's last hope of surviving outside of court protection faded Sunday after British bank Barclays PLC withdrew its bid to buy the investment bank. Lehman learned at a last-minute meeting on Friday with federal officials that it would not be getting any emergency funding to give it the liquidity it needed, Chief Financial Officer Ian Lowitt said in an affidavit. Lehman fell under the weight of $60 billion in soured real estate holdings and tighter a credit market that forced it to seek court protection. The filing had been so hastily made that the company had not yet filed motions by Monday morning that are typically made on the first day, such as asking the court for permission to continue paying employees. Filing for Chapter 11 protection allows a company to restructure while creditor claims are held at bay. The company most likely chose to file under Chapter 11, rather than a Chapter 7 liquidation, so that it could retain more control over the selling off of assets, said Stephen Lubben, the Daniel J. Moore professor of law at Seton Hall Law School. In a Chapter 7 filing, the court would immediately appoint a trustee to take over the case. «I'm sure they think they could conduct a better liquidation themselves, and that's probably true,» Lubben said. The investment bank had said earlier that none of its broker-dealer subsidiaries or other units would be included in the Chapter 11 filing. It says it is exploring the sale of its broker-dealer operations and is in «advanced discussions» to sell its investment management unit. In its bankruptcy petition, Lehman listed Citigroup among its biggest unsecured creditors, with about $138 billion in bonds as of July 2. The Bank of New York Mellon Corp. was listed as holding about $17 billion in debt. Lehman said that as of May 31, it had assets of $639 billion and debt of $613 billion. Moreover, a feverish sell-off in Europe and Asia turned markets sharply lower on Monday after a double-fisted blow from Wall Street that two of its oldest financial institutions had fallen. European benchmarks were punished following sharp losses across Asia after news that Lehman Brothers had filed for bankruptcy and Merrill Lynch would be sold to Bank of America. The FTSE-100 share index was down 4.07 percent in London, the Paris CAC-40 was off 4.5 percent and Germany's DAX 30 index of blue chips sagged 3.23 percent. The falls were led by insurance and financial stocks, with shares in French insurer AXA SA down 11.1 percent, Germany's Commerzbank AG falling 10.55 percent, and Swiss bank UBS AG down 15.4 percent. Britain's Barclays, which had considered a combination with Lehman Brothers but walked away, was down 10.2 percent. «We will have a shakeout today and there will probably be more damage in the afternoon when the U.S. gets going,» said Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe in London. U.S. stocks headed for a sharply lower open: the Dow Jones industrial average futures fell 372, or 3.3 percent, to 11,086; Standard & Poor's 500 index futures fell 48.00, or 3.81 percent, to 1,210.50; Nasdaq 100 index futures fell 49.25, or 2.8 percent, to 1,730.25.
