Lehman: the Filing Mystery

There's been more going on this week than financial reporters have been able to cover. Lehman's bankruptcy filing now looks like a footnote. But there's a big question that remains unanswered about Lehman: what triggered the filing? Lehman's first day filings don't really explain. The failure to reach a deal last weekend alone wouldn't be a trigger. Lehman was hard pressed, but there doesn't seem to have been an immediate liquidity event; it wasn't like they weren't going to be able to make payroll. Was there a covenant default triggered somewhere than set off cross-default clauses? If so, why wasn't Lehman able to buy forbearance in the usual 30-days before a cross-default would be triggered? (I can't believe there was a payment default that didn't get reported.) Maybe this story will come out in later Lehman filings or in the financial press....

Comments

That is a really good question. I was wondering the same thing myself. they had access to all the Fed programs at the B-D level. It must have been rolling over debt at the holding company while the B-D liquidity couldn't be upstreamed. Not sure.

[David Johnston]

It had to do with JPM

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