Lehman Brothers demands young bankers repay 30,000 bonuses paid before collapse

[Andy Nguyen]

Lehman Brothers, the collapsed investment bank, is demanding a group of young would-be bankers repay 30,000 bonuses handed to them when they joined the bank in the summer of 2008.

By James Quinn and Helia Ebrahimi
Published: 7:00AM GMT 21 Nov 2009

Lehman collapsed in September 2008 with debts of more than 370billion, sending shockwaves through the financial community and plunging the global economy even further in to the worst recession seen in 70 years.

PricewaterhouseCoopers (PwC), which is administering the winding up of the banks estate in the UK and Europe, has written to 48 people 39 of whom were newly qualified graduates - who joined Lehman that last summer to retrieve the funds.

The accountancy firm is demanding the individuals, some of whom are believed to have had difficulties in finding alternative jobs after Lehman collapse, repay the money immediately.
The amounts in question are loans and were set up as such by Lehmans for tax reasons before our appointment as administrators, said a PwC spokesman.

Unfortunately, they cannot be waived or forgiven for tax reasons. Of course, if repayment causes any individual hardship, the administrators will certainly review individual circumstances on a case by case basis. Letters regarding the repayment of the 'loans have been sent to all those involved, with the total sum involved amounting to 1,486,395. A number of the associates are believed to be seeking legal opinions as to whether or not they have to repay the money.

Lehman employed 5,000 people in the UK before its collapse, although only half were taken on by Japans Nomura Securities when it bought some of the investment banks European business following the collapse.

To date, PwC has billed a total of 154m for its work winding up the assets and affairs of Lehman in Europe, with senior partners charging 302-an-hour for their work on the case.
The worldwide bankruptcy of Lehman Brothers was the largest of its kind in history, and the pre-eminent institutional collapse during the 18-month long global financial crisis.

Earlier this week, the administrators of the US division of Lehman revealed creditors claims against it could total $1 trillion (606bn), even though it has assets of just over $30bn.

Lehman Brothers demands young bankers repay 30,000 bonuses paid before collapse - Telegraph

 

[Eugene Krel]

That just absolutely sucks for them. Hope there is a legal recourse.

 

[IlyaKEightSix]

And if they say no/already spent/so on? That money was already paid. You can't take it back.

 

[GoIllini]

And if they say no/already spent/so on? That money was already paid. You can't take it back.

Typically you have to sign a contract on receipt of the money stating that you understand this is a loan that is to be forgiven after a certain period of time. In other words, this money is like a loan from the credit card company and payable back to the firm if you leave.

Typically, the loan gets forgiven if the firm lays you off- but it's not technically part of the contract. Legally, they can get the money back from you or force you into bankruptcy. At this point the creditors don't care too much about the firm's reputation.