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Lehman creditors face some losses Lehman staff set to get bonuses
(about 4 hours later)
Some creditors of the European arm of failed bank Lehman Brothers will likely lose their money, the bank's administrators have said. The remaining UK staff at the failed investment bank Lehman Brothers are to receive their annual bonuses despite the firm being in administration.
However, it will take time before it becomes clear how much, they added. Just over 1,000 people are still employed by Lehman's administrators as they try to unwind the company's complex financial positions.
The head administrator, Tony Lomas, also said some of the bank's creditors will likely lose their money.
However, it will take time before it becomes clear how much, he added.
Billions of dollars of bad debt forced Lehman Brothers to file for bankruptcy protection on 15 September.Billions of dollars of bad debt forced Lehman Brothers to file for bankruptcy protection on 15 September.
PricewaterhouseCoopers is the administrator to the European arm and the process of unravelling the firm's trades is expected to take many years. 'Significant pay packages'
Lehman's was the largest US bankruptcy filing in history. Mr Lomas confirmed that current employees will be paid a bonus roughly similar to the amount received last year.
"The prospect is that some creditors will lose money. How much - we can't determine that for a significant time," said joint administrator Tony Lomas after a meeting in London. The prospect is that some creditors will lose money Tony Lomas, administrator
"In order to keep these people, we need to offer them broadly what they've been paid in the past," said Mr Lomas.
"So there will be significant pay packages, but that's the price of hiring that sort of resource."
PricewaterhouseCoopers is the administrator to the European arm of Lehman and the process of unravelling the firm's trades is expected to take many years.
"The prospect is that some creditors will lose money. How much - we can't determine that for a significant time," said Mr Lomas.
The process could take as long as seven years and would be "10 times" more complicated that the bankruptcy of US energy firm Enron, Mr Lomas said.The process could take as long as seven years and would be "10 times" more complicated that the bankruptcy of US energy firm Enron, Mr Lomas said.
Around 1,000 creditors or their representatives listened to the administrators explain the long process ahead of them.
PWC said that they had recovered around just $5bn of a potential $550bn of obligations to creditors on the bank's balance sheet.
Lehman Brothers has more than $1 trillion worth of outstanding trades for PWC to work through.
DealsDeals
PWC has already negotiated a deal with Nomura, which is to buy Lehman's European and Middle Eastern equities and investment bank operations.PWC has already negotiated a deal with Nomura, which is to buy Lehman's European and Middle Eastern equities and investment bank operations.
And it plans to retain 1000 staff in London and will pay them their 2007 bonuses. It plans to retain 1,000 staff in London and will pay them their 2007 bonuses.
Nomura is also buying the bank's franchise in the Asia Pacific region.Nomura is also buying the bank's franchise in the Asia Pacific region.
Barclays has bought Lehman's North American investment banking and capital markets divisions.Barclays has bought Lehman's North American investment banking and capital markets divisions.
Lehman is also facing legal actions around the world.Lehman is also facing legal actions around the world.
Deutsche Bank said it has sued the bank to recover $72.5m (£49.2m) it says was accidentally transferred to Lehman after it had filed for bankruptcy.Deutsche Bank said it has sued the bank to recover $72.5m (£49.2m) it says was accidentally transferred to Lehman after it had filed for bankruptcy.