--- title: "Lehman's collapse in June-September 2008" language: en canonical: https://dossiertwist.com/dossiers/lehman-brothers-holdings/september-2008/ as_of: 2026-10-14 keywords: ["Lehman Brothers Holdings","LBHI","Repo 105","Valukas examiner report","Ernst & Young","Chapter 11","Lehman Brothers Inc.","SIPA liquidation","Lehman Brothers Treasury Co.","Lehman Brothers Bankhaus","Lehman Brothers International (Europe)","Plan Trust","Alvarez & Marsal","Richard Fuld","Aurora Loan Services","BNC Mortgage","JPMorgan Chase","Barclays Capital","American Express","Lehman Brothers Special Financing"] --- # Lehman's collapse in June-September 2008 **Question.** What happened to Lehman between June and September 2008, and how was the business sold and wound down? **Answer.** In June 2008 Standard & Poor's cut LBHI's ratings and Lehman reported lower net leverage, which the examiner later recalculated without Repo 105, and a larger liquidity pool. According to the examiner, Lehman failed because it lost the confidence of lenders and counterparties and ran out of liquidity. LBHI filed for Chapter 11 on September 15, 2008; its North American business was sold to Barclays Capital for $1.54 billion, while a $450 million Barclays debtor-in-possession loan funded LBHI's operations, and Lehman Brothers Inc. was placed in a SIPA liquidation on September 19. ## June to September 2008 - Analysis: LBHI reported that on June 2, 2008 Standard & Poor's lowered its counterparty ratings from A+/A-1 to A/A-1 with a negative outlook, and that it bought back 1.3 million shares the next day. Its June 9 press release, with preliminary estimates as of May 31, said the firm had grown its liquidity pool to about $45 billion, cut gross assets by about $130 billion, reduced net leverage to under 12.5x from 15.4x and raised $4 billion of convertible preferred stock and about $5.5 billion of long-term debt; the examiner later calculated that without Repo 105 second-quarter net leverage would have been 13.9 rather than the 12.1 reported. On September 10 LBHI issued its expected third-quarter results, signed by Ian T. Lowitt as chief financial officer. [src-003] [src-128] [src-051] - Analysis: The examiner's report states that Lehman failed because it could not retain the confidence of its lenders and counterparties and did not have enough liquidity to meet its obligations, after business decisions had left it with heavy concentrations of illiquid assets such as residential and commercial real estate; confidence fell further when attempts to form strategic partnerships failed and Lehman reported losses of $2.8 billion in the second quarter and $3.9 billion in the third without a definitive survival plan. [src-038] ## The filing - Analysis: At a special meeting on September 14, 2008 LBHI's board resolved to file under Chapter 11 and to engage Weil, Gotshal & Manges LLP as its attorneys; Lowitt certified the resolutions and signed the petition. The case was commenced on September 15 in the U.S. Bankruptcy Court for the Southern District of New York, and affiliated debtors followed; the cases are jointly administered as In re Lehman Brothers Holdings Inc. et al., Case No. 08-13555. The plan was confirmed on December 6, 2011 and became effective on March 6, 2012, and LBHI's own case was still active in 2026. [src-014] [src-002] [src-101] ## The Barclays sale and the broker-dealer - Analysis: On September 16, 2008 LBHI, Lehman Brothers Inc. and LB 745 LLC agreed to sell to Barclays Capital Inc., for $1.54 billion, Lehman's North American investment banking, fixed income and equities business and its private investment management business, together with the 745 Seventh Avenue headquarters and two data centers; the court approved the sale on September 20 and it closed on September 22. To fund its operations meanwhile LBHI entered into a $450 million debtor-in-possession credit agreement with Barclays Bank PLC as agent and lender on September 17. [src-052] - Analysis: On September 19 the Securities Investor Protection Corporation commenced a case under the Securities Investor Protection Act for Lehman Brothers Inc.; the court appointed James W. Giddens as trustee. Under a letter agreement of September 22 among Barclays, The Depository Trust & Clearing Corporation and the trustee, the trustee instructed DTCC's clearing subsidiaries to close out LBI's pending transactions and $250 million of the purchase price was paid to DTCC as collateral. The SIPA case was closed in September 2022; according to the trustee, former securities customers were satisfied at 100% of net equity, secured, priority and administrative creditors were paid in full, and general unsecured creditors received at least 41.2841%. [src-049] [src-052] ## Sources - [src-003] Lehman Brothers Holdings Inc. Form 8-K of June 9, 2008, U.S. Securities and Exchange Commission (EDGAR), 2008-06-09 - [src-128] Lehman Brothers press release on second-quarter 2008 results, Exhibit 99.1 to the June 9, 2008 Form 8-K, U.S. Securities and Exchange Commission (EDGAR), 2008-06-09 - [src-051] Lehman Brothers Holdings Inc. Form 8-K of September 10, 2008, U.S. Securities and Exchange Commission (EDGAR), 2008-09-10 - [src-038] Court record source · src-038 - [src-014] Court record source · src-014 - [src-002] Lehman Brothers Holdings Inc. Form 8-K (event date March 6, 2012; filed March 12, 2012), U.S. Securities and Exchange Commission (EDGAR), 2012-03-12 - [src-101] Court record source · src-101 - [src-052] Lehman Brothers Holdings Inc. Form 8-K (event date September 16, 2008), U.S. Securities and Exchange Commission (EDGAR), 2008-09 - [src-049] Court record source · src-049