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Lehman Chief Fuld Said to Be Leaving Bankrupt Company (Update1)
By Linda Sandler and Jeff St.Onge
Nov. 5 (Bloomberg) -- Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld, who took home $34.4 million in pay in 2007, will leave the bankrupt company by the end of the year without any bonus, a person familiar with the matter said.
Fuld, 62, has been helping lawyers and other professionals disperse Lehman's assets to pay creditors since the fourth- largest investment bank filed the biggest U.S. bankruptcy Sept. 15 in New York. His role will likely be filled by Bryan Marsal of Alvarez & Marsal, Lehman's restructuring officer, according to two people familiar with the bankruptcy case.
A large departure bonus for Fuld would have been illegal under U.S. bankruptcy law, said Lynn LoPucki, a law professor who teaches at Harvard University and the University of California. Severance payments to insiders are limited to 10 times the termination money paid to other full-time employees, he said.
Denise DesChenes, a spokesman for Fuld, couldn't immediately be reached for comment, nor could Rebecca Baker, spokeswoman for Alvarez & Marsal.
The three people familiar with the matters asked not to be identified because of the confidential nature of the decisions.
Fuld, a onetime Wall Street trader, has been Lehman's CEO since 1993. The company, which listed $613 billion in liabilities in its bankruptcy petition, foundered under subprime and structured investments.
Yesterday, New York State Comptroller Thomas P. DiNapoli asked the court to appoint a trustee to oversee the bankrupt estate of Lehman and its units, saying Fuld and firm's board ``are wholly inappropriate parties to supervise this company through this large and complex liquidation.''
Shouldn't Be Involved
Fuld and board members ``should not be involved in directing any investigation into what led Lehman to its historic collapse,'' the comptroller said in court papers.
Lehman is the subject of three federal criminal probes and at least 12 individuals have been subpoenaed to testify before grand juries, lead Lehman bankruptcy lawyer Harvey Miller said Oct. 16 in federal court in Manhattan.
The investigations launched by U.S. attorneys in Brooklyn and Manhattan in New York and in Newark, New Jersey, are focusing in part on Lehman's role in the $330 billion auction-rate securities market and possible crimes associated with its $6 billion June stock issue, according to a person familiar with the case who requested anonymity.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Linda Sandler in New York at [email protected]; Jeffrey St.Onge in London at [email protected]
Last Updated: November 5, 2008 12:11 EST
Lehman Chief Fuld Said to Be Leaving Bankrupt Company (Update1)
By Linda Sandler and Jeff St.Onge
Nov. 5 (Bloomberg) -- Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld, who took home $34.4 million in pay in 2007, will leave the bankrupt company by the end of the year without any bonus, a person familiar with the matter said.
Fuld, 62, has been helping lawyers and other professionals disperse Lehman's assets to pay creditors since the fourth- largest investment bank filed the biggest U.S. bankruptcy Sept. 15 in New York. His role will likely be filled by Bryan Marsal of Alvarez & Marsal, Lehman's restructuring officer, according to two people familiar with the bankruptcy case.
A large departure bonus for Fuld would have been illegal under U.S. bankruptcy law, said Lynn LoPucki, a law professor who teaches at Harvard University and the University of California. Severance payments to insiders are limited to 10 times the termination money paid to other full-time employees, he said.
Denise DesChenes, a spokesman for Fuld, couldn't immediately be reached for comment, nor could Rebecca Baker, spokeswoman for Alvarez & Marsal.
The three people familiar with the matters asked not to be identified because of the confidential nature of the decisions.
Fuld, a onetime Wall Street trader, has been Lehman's CEO since 1993. The company, which listed $613 billion in liabilities in its bankruptcy petition, foundered under subprime and structured investments.
Yesterday, New York State Comptroller Thomas P. DiNapoli asked the court to appoint a trustee to oversee the bankrupt estate of Lehman and its units, saying Fuld and firm's board ``are wholly inappropriate parties to supervise this company through this large and complex liquidation.''
Shouldn't Be Involved
Fuld and board members ``should not be involved in directing any investigation into what led Lehman to its historic collapse,'' the comptroller said in court papers.
Lehman is the subject of three federal criminal probes and at least 12 individuals have been subpoenaed to testify before grand juries, lead Lehman bankruptcy lawyer Harvey Miller said Oct. 16 in federal court in Manhattan.
The investigations launched by U.S. attorneys in Brooklyn and Manhattan in New York and in Newark, New Jersey, are focusing in part on Lehman's role in the $330 billion auction-rate securities market and possible crimes associated with its $6 billion June stock issue, according to a person familiar with the case who requested anonymity.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Linda Sandler in New York at [email protected]; Jeffrey St.Onge in London at [email protected]
Last Updated: November 5, 2008 12:11 EST
