Bankruptcy court as government intervention

Remember that debate? Many of you argued something like this:

You don't support your statement that "today's bankruptcy procedures
are ill-suited for disposing of a large financial institution in a
timely manner".

Mark me down for preferring a procedure that's established and known over some seat of the pants, unpredictable bailout.

Here is an update:

Lehman Brothers' European clients and creditors could have to wait
another two years before they get back billions of dollars of assets
tied up in the bank when it collapsed a year ago.

Tony Lomas,
partner at PwC and administrator for the bank's European operations,
said he had hoped to have "broken the back" of the case by this time
next year, substantially reconciling claims, returning assets to
clients and putting in place a process for paying dividends to
unsecured creditors.

He said it could now take two more years
after an English judge decided last month that he could not approve a
scheme of arrangement that would have helped hasten the winding up.

European business is one of the biggest and most complex parts of the
bank, with thousands of intricate investments, and client and trading
relationships that are still being unravelled.

"I had hoped to
break the back of this within 24 months but with the setback around the
scheme and other issues, a more realistic estimate is now 24-36
months," Mr Lomas told the Financial Times in an interview.

There is a reason why we should be afraid of putting large financial institutions into bankruptcy court as those courts currently operate.  So many of you bash the Fed and the regulators, so few of you bash bankruptcy court.  It's not always the "fault" of the court, these are simply difficult cases to unravel and resolve.  But so far we're just not trying hard enough to improve bankruptcy procedures as they apply to Lehman and others.


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