NEW YORK, USA

A US court yesterday paved the way for final approval of the US$65-billion bankruptcy of Lehman Brothers, the investment bank whose 2008 collapse plunged the world into financial crisis.

Lehman’s tens of thousands of creditors must vote on the bankruptcy plan by November 4 and a final confirmation hearing has been scheduled for December 6, bankruptcy judge James Peck said in a motion to approve the plan.

The court’s approval was a significant step forward in resolving the largest bankruptcy case in US history.

Under the plan, which was agreed in late June after two previous versions failed to gather enough support, some US$65 billion will be split among Lehman’s creditors, leaving them around 20 cents for each dollar that they are owed.

Creditors have claimed they are owed a total of US$325 billion from Lehman, which collapsed on September 15, 2008, after its risky bets on the US housing market turned bad, sending shockwaves through the world banking system.

AFP

The headquarters of Lehman Brothers in New York. (Photo: AP)