Susan Black, Big4.com

Lehman Brothers collapsed that fateful day in mid-September 2008 and it has been a good two and a half years since that time. PricewaterhouseCoopers PwC UK was appointed a Joint Administrator of Lehman Brothers International (Europe) (LBIE) with a charter to wind down operations in the most effective and efficient manner. Today, PwC provides a 30-month update  with progress in the last six month period of the Administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, were appointed as joint administrators on 15 September 2008.

According to Tony Lomas, joint administrator and partner at PwC, with good progress in the last half-year, further £2.1bn of Client assets have been returned to their owners, bringing the overall total to £13bn, and another £1.6bn of House assets have been realised, bringing total realisations to £10.7bn. There appears to be much legal movement in the last six months, relating to claims being made between a small number of Lehman group companies, with the outcomes materially benefitting creditors in one estate, to the cost of creditors in another.

PwC highlights key achievements:

A Consensual Approach, leading to first 100 Claims Determination Deeds to creditors valued at £1.1bn, with £0.4bn of claims have now been formally agreed

A major change programme to achieve full independence of the IT and infrastructure service provisions from Nomura and BarCap.

A win in legal action to confirm ownership of various assets held by LBIE but claimed by affiliates (The ‘RASCALS’ litigation).

The appeal hearing in the UK Supreme Court of the Appeal Court judgement in relation to pre-administration Client Money is scheduled for October 2011.

A fully functioning workforce at Lehman Brothers in administration, with 500 Lehman employees and contractors necessary to unwind the business and return money to creditors.

And get this – most Lehman staff have been with PwC since the beginning of the administration and continue to enjoy the benefits of working for a fully functioning investment bank and full employee benefits. And says Jane Woolcott, joint COO of LBIE and PwC partner, “In the last six months alone, we have recruited 45 staff and look to replace PwC staff with experienced external hires wherever possible. We also currently have eight employees on maternity leave and fully expect them to rejoin us when their maternity leave is completed.”

Yes that is about 550 folks working full time to wind down the storied Lehman Brothers in an otherwise dismal employment situation, these dedicated employees are working hard to completely close the very same bank they were employed with earlier, with what we can only imagine to be a combination of gratitude and incredulousness. A year ago, PwC reported that there were 440 employees engaged in this effort, so it seems that the employment for this administration has actually increased a solid 25% in one year.

Typically, PwC provides the fees that it has been granted for the administration, which at one point we had found publicly released and calculated to be an ungodly rate per hour for all the PwC folks working on this matter.

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