Case Solution for Lehman Brothers: Crisis in Corporate Governance

Complete Case details are given below :
Case Name :      Lehman Brothers: Crisis in Corporate Governance
Authors :           Randall D. Harris
Source :             North American Case Research Association (NACRA)
Case ID :            NA0176
Discipline :        Strategy
Case Length :    22 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
This case details the desperate negotiations in September of 2008 to prevent the failure of the New York investment bank Lehman Brothers. Following the collapse of the U.S. subprime mortgage market in February of 2007, a downturn in the global financial markets began to accelerate. Lehman Brothers, heavily exposed to the U.S. subprime and commercial real estate markets, began to experience increasing levels of distress. Looking for a merger to save the company, Chairman of the Board and Chief Executive Officer Richard “Dick” Fuld began to actively seek a buyer for the company. Rebuffed by several potential suitors, Fuld instructed his attorney to approach Bank of America about a deal. Negotiations between Lehman Brothers and Bank of America ensued and were encouraged by U.S. government officials. Talks between Lehman and Bank of America failed. After conversations with Barclays Bank about a bid for Lehman also stalled, Dick Fuld was isolated from the discussion and U.S. government officials began to directly manage the negotiations regarding the fate of Lehman Brothers. In a critical moment, U.K. financial authorities balked at a proposed deal to save Lehman. The Lehman Brothers board of directors was monitoring these negotiations and met four times over the weekend of September 13th and 14th. During the fourth meeting, a U.S. government official addressed the board and stated that a Lehman Brothers bankruptcy would be in the best interest of the nation. The Lehman Brothers board was now faced with a stunning dilemma: whether to further stall for time, vote against the expressed wishes of U.S. government officials, or acquiesce to the bankruptcy of the company.

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