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$1 Billion to Clean Up Lehman

In the biggest U.S. bankruptcy ever, Lehman may spend five more years selling assets of $639 billion to pay unsecured creditors as little as 14.7 cents on the dollar

Untangling the affairs of Lehman Brothers may end up costing more than $1 billion. So far the investment bank, which has been in bankruptcy since September 2008, has paid its lawyers and managers $873.1 million for 211/2 months of work, or almost $1.4 million a day. "This is going to be the most expensive Chapter 11 case ever," says Stephen J. Lubben, a bankruptcy law professor at Seton Hall University.

Enron's three years of bankruptcy cost $793 million for legal and other advisory fees, according to the database of Lynn M. LoPucki, who teaches bankruptcy law at the University of California at Los Angeles. Including Enron's interim management would add more than $100 million to the total cost, he says.

The restructuring firm Alvarez & Marsal, which provided Lehman with its current chief executive officer, Bryan Marsal, led the payments with $311.6 million for management through June, according to a July 22 filing with the Securities & Exchange Commission. Weil, Gotshal & Manges, the New York-based law firm, collected $200.6 million for acting as Lehman's lead bankruptcy law firm. Milbank, Tweed, Hadley & McCloy got $56.5 million for advising Lehman's creditors' committee.

In September 2008, Lehman filed the biggest U.S. bankruptcy ever, with assets of $639 billion. It has said it may spend five more years selling assets to pay unsecured creditors 14.7 cents to 44.2 cents on the dollar. "There were $1 trillion in claims filed," Marsal wrote in an e-mail. "This case has been without significant controversy, and disputed creditor issues have been at a minimum. It has been pretty efficiently managed."

The Bottom Line: Lehman Brothers' bankruptcy, the biggest on record, is on its way to surpassing Enron's as the costliest to resolve.

Sandler is a reporter for Bloomberg News.

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