$2bn – the legal bill for unwinding Lehman

The man in charge of unwinding Lehman Brothers, the collapsed investment bank, says the bankruptcy could cost $2bn in legal fees in the US alone.

Harvey Miller, the veteran bankruptcy lawyer called in to cobble together a Chapter 11 filing on that fraught weekend in September 2008, revealed the number in testimony to the Financial Crisis Inquiry Commission this morning.

And he said that 80 bankruptcy proceedings involving Lehman subsidiaries in 18 other countries are costing around the same amount again.

Court-approved expenses for the bankruptcy of Enron, previously the world’s most lucrative bankruptcy, were a puny $757m by comparison.

Here’s Mr Miller, adding together all the legal bills and the cost of 200 administrative assistants hired from Alvarez & Marsal for the US proceedings in the Lehman case:

Through July 31, 2010, the cost of administering the Lehman bankruptcy case, based upon the filed operating reports and applications by professionals for compensation and reimbursement of expenses, but including the costs of the A&M employees necessarily engaged to replace the Lehman employees transferred to BarCap is approaching $1bn. Those costs include approximately $100m incurred in connection with the independent examination of Lehman’s affairs made by Anton Valukas, the senior partner of Jenner & Block, a Chicago-based law firm, as the Bankruptcy Court-appointed Examiner. There is no current estimate of the future costs of administration. However, it is likely over the next two years the expenses of administration may approximate a like amount.

When Mr Miller says Lehman is “the largest, most complex, multi-faceted and far-reaching bankruptcy case ever filed in the United States”, he is not joking.

Let’s not have to do something like this ever again, eh.

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