PricewaterhouseCoopers was this week poring over the remains of the most high-profile victim of
the credit crunch to date, with as many as 80 experts from the firm unravelling the complex web of Lehman Brothers’ derivatives book.

The administration, and instant loss of 5,000 city jobs, is the biggest UK collapse since MG Rover in 2005. Earlier this week the administrators described the task ahead as being ‘larger and more complex’ than Rover or Enron. Partners Tony Lomas, Dan Schwarzmann, Steven Pearson and Mike Jervis are handling the wind-down.

In addition to the headache of working out Lehman’s securitisations, which packaged up sub-prime debt and sold them on to investors, Lehman’s also holds many billions of assets, including commercial property and golf courses. It is also involved in joint ventures and all of these holdings will have to be subject to a managed and orderly disposal.

Administrators declined to be specific as to how long it would take them to understand the values of the complex contracts, with some suggesting it might be years. PwC has warned that there will be a long wait before creditors are told what they could be expecting back.

There has been speculation that PwC will have to hire specialists to make sense of the investment bank’s derivatives contracts, but all the initial work, apart from legal advice, is being handled by the firm, it said. This includes tax, corporate finance, financial services, real estate, human resources, and asset recovery work.

In the US, Lehman Brothers has filed a Chapter 11 bankruptcy petition, which helps to protect a collapsed company from creditors looking to recoup their investments. PwC said its wind down would not be affected by what happened across the Atlantic.

‘There are actually a number of aspects of Chapter 11 which are available in the current UK insolvency regime and UK administration legislation does give creditors protection in the UK. In this instance we have specifically been appointed to wind down the business,’ PwC said.

PwC also said that the firm may have to think about liquidation. ‘Currently the focus of the administration is the realisation of value for the creditors. The next step of the process may be liquidation, but this is still some way off. There will be a creditors’ meeting in due course.’