Seeing a way out of the Lehman abyss

By Tom Freke and Emily Chasan

LONDON/NEW YORK (Reuters) - On five floors of New York City's Time-Life building, just steps away from Lehman Brothers' former Times Square headquarters, some 600 financial professionals are still employed in the arduous task of unwinding what was the fourth-largest U.S. investment bank.

For months, the staff and consultants have sorted through a maze of derivatives contracts, real estate and other assets that were left in chaos on the morning of September 15, 2008, when the 158-year-old Wall Street firm sought bankruptcy protection and helped trigger a near-collapse of the global financial system.

Even a year after Lehman (LEHMQ.PK) filed the largest and most complex bankruptcy in U.S. history, thousands of funds with investments locked up by the bankruptcy have yet to file their claims, and former customers, counterparties, clients, and vendors are still wading through piles of documents.

Those working at the bank now are trying to maximize value for the bank's creditors or at least give them an idea of what their claims might be worth.

Tony Lomas, chairman of PricwaterhouseCoopers' Business Recovery Services unit in Europe, and once the administrator of Enron's European arm, is joint administrator of Lehman Brothers in Europe, and is quick to draw diagrams when words fail to explain the former investment bank's complex assets and liabilities.

"Of the six thousand or so of Lehman's client funds, more than half have not told us what they think we have got that belongs to them," said Lomas who, with his counterparts in New York, advisory firm Alvarez & Marsal, are seeking to wind down the failed firm.

"While I might have nearly $9.0 billion (5.5 billion pounds) of cash to distribute to creditors, I need to know the universe of creditors I have to share it with," said Lomas. "Who knows whether there's $1.0 billion of them or $200 billion?"

The problems are similar in New York, where creditors owed money from Lehman's derivatives contracts are not due to file their claims until later this month, and additional information on those claims will not arrive until October.