Uncertainty clouds Lehman Bros outlook
Lehman Brothers Australia has been placed into voluntary administration amid uncertainty around its ability to repay $800 million worth of debt locally and overseas following the collapse of its parent company.
The appointment of the administrators — Stephen Parbery and Neil Singleton of PPB — was the result of substantial loans owed by Lehman Australia to Lehman companies in Asia, the UK and US. PPB partner Stephen Parbery said the most significant creditors of the Australian operations of Lehman Brothers were international Lehman Brothers companies, owed $531.6 million.
Lehman Brothers Australia also owes $300 million to local Lehman companies.
But while the company itself is now being wound up, its staff are in high demand.
Japanese broker Nomura has been in negotiations with Lehman Australia and other Asia Pacific Lehman franchises regarding the absorption of the employees of the embattled businesses.
But while Nomura offered to buy certain assets of the company, it is not buying all, nor any trading liabilities. The administrators said Nomura is “interested in employees, but not all the assets of the companies”.
The majority of Lehman Australia employees are now in negotiations with Nomura for new contracts. The administrators said they will also employ key Lehman Australia personnel to assist with dealing with the assets of the business.
The administrators said as yet they had discovered no mismanagement of the local operations, but rather a company that had become insolvent and suffered significant brand damage as a result of the Chapter 11 filing of its parent.
The assets of Lehman Brothers Australia include investment in real property of $300 million and other “substantial” financial instruments, including mortgage backed securities and bonds. PPB has been appointed administrators to 15 Australian Lehman Brothers companies in order to maximise returns for stakeholders, the company said. PPB will report back to creditors in a month.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
