Administrators of the European arm of failed investment bank Lehman Brothers Holdings Inc. said Friday that untangling its financial dealings will be a much bigger -- and far lengthier -- task than dealing with the fallout of the collapse of energy company Enron Corp.

After meeting with more than 1,000 creditors of Lehman Brothers International (Europe), or LBIE, in London, administrators from accountancy firm PriceWaterhouseCoopers said that they had recovered around just $5 billion of a potential $550 billion of obligations to creditors on the bank's balance sheet.

The PWC team is trying to unravel a complex web of tens of thousands of trades that amount to more than $1 trillion and expressed disappointment that two months into the job they are further behind than planned because they have yet to receive confirmation about LBIE funds held by third parties.

"In scale, it is going to be 10 times as big and as complicated," PWC administrator Tony Lomas told journalists, referring to the Enron case and noting that he and several of his associates were still working on those files some seven years down the road.

"I don't see this is going to be any quicker or any easier than that," he added.

Lomas said it was far too early to tell how much creditors would get once the assets and liabilites are unwound among third parties and other Lehman businesses around the world.

"The balance sheet position will be north of $1 trillion and we've got a long way to go before knowing what the position is for creditors and, if there is a shortfall, just how short it will be," he said.

Billions of dollars in bad debt forced Lehman Brothers, once the fourth-largest investment bank in the U.S., to file for bankruptcy in September amid the world's worst financial crisis in decades.

The bank's collapse shocked many who thought the U.S. Treasury would step in to keep it afloat. Uncertainty over the consequences of the failure -- with thousands of counterparties on Lehmans' complex derivative contracts left potentially exposed -- dealt a severe shock to the financial system.

PWC already has succeeded in negotiating a deal with Japanese brokerage Nomura Holdings Inc. for it to buy Lehman's European and Middle Eastern equities and investment banking operations.

PWC declined to specify how many creditors there are to the European business, but said that details of Friday's meeting were sent out to around 11,500 individuals and businesses. Around 100 creditors have applied for "hardship status" because of their own financial positions, which, if granted, would expedite their claims.

Around 1,000 European workers lost their jobs as a result of the collapse and another 500 resigned.

Around 2,500 staff, mostly at the European arm's London headquarters in the Canary Wharf financial district, were transferred to Nomura and another 1,100 are now on the books of PWC.

Pearson said that staffing costs are now running at $8 million a week, while fees to engage PWC are racking up some 4 million pounds ($6 million) a week.

Nomura is also purchasing the bank's franchise in the Asia Pacific region, including Japan and Australia.

Barclays PLC, which walked away from a deal to buy the entire company before the collapse, has bought Lehman's North American investment banking and capital markets businesses as well as its New York headquarters.

Deutsche Bank AG said this week that it has sued the bank to recover $72.5 million it says was accidentally transferred to Lehman after it had filed for bankruptcy.

PWC associate Steven Pearson said Friday that Lehman Brothers Bankhaus AG in Germany, which is in moratorium and likely to be given insolvency protection, has $1 billion in deposits owned by LBIE.

Lehman's liquidation is the biggest bankruptcy filing in U.S. history. It filed with assets of $639 billion and debt of $613 billion.

Posted by CEOinIRVINE
l