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 At least one question has been answered by Monday's Chapter 11 filing of Lehman Brothers Holdings Inc.
Back in December, The Deal and Bankruptcy Insider wondered what case -- if any -- would be the signature filing of the new bankruptcy upcycle. Since then, we've had some candidates. There was oil and asphalt
transporter SemGroup LP, casino operator Tropicana Entertainment LLC
and Linens 'n Things parent Linens Holding Co. But they didn't epitomize the angst of the times, really. Unlike Enron Corp. or WorldCom Inc., two megabankruptcies that defined the widespread accounting shenanigans and corporate hubris of the last major upcycle, or the Federated Department Stores Inc. failure in the early 1990s that underscored the leveraged buyout blowups then, no bankruptcy had really defined the current slaughter. Until now. Lehman isn't just big -- and boy, it's that, given that it's several times larger than anything else in the BankruptcyInsider.com database -- it's also complex. There's Lehman's effect on the global markets, on confidence in the U.S. financial system, on the plight of Wall Street, in general. But even more than all that, Lehman represents in grand style just how all the chickens have finally come home to roost. A real estate market whose meteoric ascent was fueled by lax lending. A world where debt is far outstripping anyone's ability to pay. A financial community bent on quick profits, with no regard for the hell to be paid tomorrow. A society where everyone else is to blame, where no one is really accountable for anything. There was going to come a time when the American taxpayer wasn't going to step in like it did with Fannie Mae, Freddie Mac or Bear, Stearns Cos. There was going to be a time when the mortgage crisis was going to hit Wall Street harder than just a charge to earnings. There was going to be a time when live for today and we'll die tomorrow was really going to have meaning again, that the financially careless really would experience a liquidity death. On Monday morning at 8 a.m. in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan, that watershed moment, that defining petition had arrived, and Lehman had filed it. And what about American International Group Inc.? At this writing, it's future was still in the area, rumors of a government bailout still swirling. In other words, Lehman remains the peak, or nadir, however you want to look at it, of this bankruptcy upcycle, because it finally went to the far reaches where governments and politicians and Wall Street didn't want to go: more assistance, more coddling. Accountability has no better home than bankruptcy, as Lehman will now find out. - David Elman Categories Deal Video
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