Lehman Brothers Europe short of $8 billion
It has been revealed that PwC, the administrator for the Lehman Brothers European business, has requested the return of $8 billion from the company's US parent. In a rather bizarre way of controlling cross company funding it appears that funds associated with all areas of the empire were returned to the US on a daily basis and placed on deposit by the US head office.
PwC has been trying to arrange the return of the funds to pay for day to day expenses, creditors and wages for the 4,500 strong European arm's staff with no success. They have now taken the unusual step of applying for a court order in New York to ensure that the funds are returned to 'their rightful owner'.
It will be interesting to see how this request is received as PwC has also indicated it may have found a buyer for the European arm of the business. If the $8 billion is not returned in the short term this could cause all kinds of problems and also scupper any potential sale of the business. It is only when problems such as the Lehman Brothers situation occur that we actually see how these companies work and the amount of day to day working capital they need to keep going.
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