It is now time for the investors to rejoice the beneficial scenario of the Lehman Brothers. After the UK operations of the Lehman Brothers crashed, a few of the investors took the pain of investing in the hope to gain some profit. To everyone’s surprise, they got back 7 times the invested amount as the assets of the investment bank dominated the liabilities.
The partner at the PwC, the accounting firm, Tony Lomas stated that the surplus amount was around £8 billion.
Tony Lomas also stated that the collapse of the investment bank into administration 10 years ago had invited a new peak of the financial crisis, which had led to severe scenarios. The creditors waited while the administrators unwound countless positions of trading which were more than they owed as they were entitled to get back the interest on the debts. In fact, they were given 40% more than the principal amount.
On the other hand, some of the investors refrained from waiting and happily gave away the claims even before the company dissolved. The investors, who waited patiently for the outcome, received 7 times the amount invested. However, it was nothing short of a gamble.
Lehman Brothers was in a good position when the operation started. Lomas stated that the parent company in the US took the available cash. Though this is a usual activity done by the MNCs with units of the central treasury, the operations in the UK failed to pay the bills worth £3 billion. Hence, Lehman Brothers was handed over to the administration. As a result, they started to search for the assets and liabilities. Since the endeavor failed to gain £100 million, they had no choice but to take a loan from a hedge fund.
However, the Executive Director for the international banks, Sarah Breeden stated that the Bank of England is not at a loss due to the interruptions from Lehman Brothers.