Restructuring

Sometime before dawn on September 15, 2008, an attorney clicked a mouse and filed a voluntary petition for relief for Lehman Brothers Holdings Inc.  The fallout from that mouse click, and the decisions that led to it, have been chronicled in newspapers, magazines, books, blogs, television and movie screenplays, congressional hearings and countless other forums, and the dialogue will continue for years to come.  On Tuesday, December 6, the bankruptcy that first shocked and then changed the world ended when a clerk at the United States Bankruptcy Court for the Southern District of New York clicked a mouse and entered docket number 23,023 — an order confirming the Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and Its Affiliated Debtors.  The confirmation of Lehman’s plan marks a monumental milestone for the company that gave meaning to the phrase “Too Big to Fail.”  The Lehman plan consensually restructures over $450 billion in creditor claims.  To put that number in perspective, it’s just a little short of the $500 billion or so owed by another large “debtor” that’s been in the news lately. . .Greece.  Judge Peck, who presided over the Lehman case, took a moment at the confirmation hearing to offer his views on the challenges in restructuring debts of this magnitude and complexity:

My world changed when the Lehman cases were assigned to me and so did yours.  For me, it has been a once in a lifetime experience.  To have worked across the bench from so many outstanding professionals in promoting conflict resolution and helping to bring these truly extraordinary one-of-a-kind cases to this culminating substantive moment, superlatives abound.  And we have heard them all and probably used them all.  This is the biggest, the most incredibly complex, the most impossibly challenging international bankruptcy that ever was.

But the greatest superlative of all is reserved for today.  This largest ever unplanned bankruptcy that started in chaos, accelerated the financial crisis and eroded confidence in the global financial system also has yielded the most overwhelming outpouring of creditor consensus in the history of insolvency law.  What a difference three years can make.  Never before have divergent holders of 450 billion dollars in claims recognized the benefits of pragmatic compromise and come together as one in support of a single Chapter 11 plan.  This is a monumental achievement in our field, awe-inspiring, really, that, to me, represents the highest and best use of Chapter 11 in the public interest.

For myself, I’m extremely proud to have presided over this transparent, fair and the remarkably successful process that stands out as perhaps the finest example of the flexibility, power and utility of the United States bankruptcy system.  Our system is not perfect.  But together we have shown the world that it can work very well indeed.  Lehman may once have been a too-big-to-fail systemically significant global financial institution.  But it was not too big to resolve in Chapter 11. 

I congratulate each and every professional in every single law firm and advisory firm here and in foreign jurisdictions that contributed in ways recognized and unrecognized, large and small, to this historic confirmation of Lehman’s plan.  You should all feel great pride in what has been accomplished.

We join Judge Peck in congratulating our colleagues, Harvey Miller and Lori Fife, who led the team, as well as the many lawyers and staff members in every department of Weil who made this achievement possible.