Lehman work 'more complex than Enron'

The administration of Lehman Brothers in the UK could prove more complex than those of Enron or MG Rover, PwC has said.

Speaking to journalists this afternoon at Lehman Brothers' UK headquarters at Canary Wharf, PwC administrator Tony Lomas said the unraveling of billions of pounds worth of derivatives contracts will make the administration as complex as that of the energy giant or the car manufacturer.

Lomas himself worked on the MG Rover administration.

'[The administration will be] larger and more complex than Enron's or MG Rover's,' Lomas said.

'The outlook is uncertain on a number of fronts. It seems amazing that a business as huge as this can fail,' he added.

PwC also confirmed that the company has a pension deficit in its defined benefit scheme.

Lehman Brothers is filing for Chapter 11 in the US after bets on real estate turned bad, and the European arm was put in the hands of PwC earlier today.

The administrators said other companies in the UK Lehman group could also fall into administration.

The firm had earlier said that when global funding dried up, the writing was on the wall for the UK operation.

'Because the group managed its funding on a global basis the UK trading operation found itself unable to meet its obligations when the flow of funds dried up last night. Our priority now is to work with management and trading counterparties to agree the manner in which the assets and liabilities will be handled,' Lomas said.

'I would also like to emphasise that a number of group companies remain solvent and will continue to trade. These companies include LBAM (Europe) and a series of special purpose vehicles designed to manage portfolios of residential and commercial real estate assets and non performing loans,' he added.

Further Reading:

Rover veteran heads up Lehman administration