General Question

isorabins's avatar

Will Lehman brothers stock disappear when it files for bankruptcy?

Asked by isorabins (50points) September 15th, 2008

Could the stock rebound a bit as they sell off their assets? This seems like it might be a great time to pick it up rock bottom…unless of course it goes to zero tomorrow.

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8 Answers

gailcalled's avatar

I strongly suggest you buy a bridge instead.

ht1979's avatar

I don’t know what typically happens in these instances, but here are a few datapoints that suggest to me that this wouldn’t be a good investment right now.

1. One of my girlfriends that is an ibanker with lehman in London has an out-of-office message that says, “This email address will cease to exist within the very near term. Please reach me on…”
2. BBC reported today that PWC has come in to take over the UK facilities – they’re reporting that there is basically zero cash and they’re thinking they likely won’t be able to pay current employees for payday on Friday.

Lightlyseared's avatar

It has filed for bankruptcy. The company has been suspeneded from trading on several markets already. They have laid of 1000’s of staff. PWC are about to hold a fire sale. It’s stock is worthless. The knock on effect is the markets have fallen so on the brightside oil has come down in price a bit so I would put some gas in the car instead.

allengreen's avatar

it was at .19 late today…...and to think this is just the beginning…..WAMU is next…..

srmorgan's avatar

The creditors are going to pick over the assets of this company and I would not risk a nickel on buying the stock, no matter how depressed the price might be.

Something to consider is how this whole thing happened (and I have not read all that much about it) but I think that this was predicated by a lack of liquidity as much as it was by straight financial losses and if so, there might be underlying assets available in the future to creditors and ultimately stockholders but I don’t think this is worth the risk of even $500.

I read something interesting in a blog last night; apparently Lehman paid out $5.7 BILLION in bonuses last night which might be subject to recovery by the creditors under certain conditions in the Bankruptcy law. Here is the link
it is the second item on the page as I write this (11 pm Monday night).

Bankruptcy law can be very different from general commercial law and there are some surprising things that can come out of it. A few years ago we extended credit to a weak customer and finally got paid about $18000 that they owed us. We then shipped another $10000 to them and about six weeks later they filed a chapter 11 petition and we lost the $10,000.
A year later we get a letter from the bankruptcy trustee demanding return of the $18000 cause it was a “preference”. I won’t go into more here but we settled for a nominal amount after hiring an attorney but I had never heard of this and I have been an accountant for over 30 years and my wife was a credit analyst for over 10 years before we were married.


gailcalled's avatar

@Steve: Interesting and typical about the huge bonuses paid, but you did mean last year? Corruption is rife, I know, but not quite that bad yet (last night).

I appreciate your experience and your skills that enable you to explain everything clearly and tersely. G (And your use of breaks.)

srmorgan's avatar

the bonuses were paid for the fiscal year ended 12/31/2007 but I don’t know if they were actually paid in cash in 2007 or 2008. I just read the article.
Last night referred to reading the blog on Sunday night.


allengreen's avatar

Get a bonus for destroying the company. Is this the new American way?

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