Lehman work 'more complex than Enron'

The administration of Lehman Brothers in the UK could prove more complex than
those of Enron or MG Rover, PwC has said.

Speaking to journalists this afternoon at Lehman Brothers’ UK headquarters at
Canary Wharf, PwC administrator Tony Lomas said the unraveling of billions of
pounds worth of derivatives contracts will make the administration as complex as
that of the energy giant or the car manufacturer.

Lomas himself worked on the MG Rover administration.

‘[The administration will be] larger and more complex than Enron’s or MG
Rover’s,’ Lomas said.

‘The outlook is uncertain on a number of fronts. It seems amazing that a
business as huge as this can fail,’ he added.

PwC also confirmed that the company has a pension deficit in its defined
benefit scheme.

Lehman Brothers is filing for Chapter 11 in the US after bets on real estate
turned bad, and the European arm was put in the hands of PwC earlier today.

The administrators said other companies in the UK Lehman group could also
fall into administration.

The firm had earlier said that when global funding dried up, the writing was
on the wall for the UK operation.

‘Because the group managed its funding on a global basis the UK trading
operation found itself unable to meet its obligations when the flow of funds
dried up last night. Our priority now is to work with management and trading
counterparties to agree the manner in which the assets and liabilities will be
handled,’ Lomas said.

‘I would also like to emphasise that a number of group companies remain
solvent and will continue to trade. These companies include LBAM (Europe) and a
series of special purpose vehicles designed to manage portfolios of residential
and commercial real estate assets and non performing loans,’ he added.

Further Reading:

Rover
veteran heads up Lehman administration