Many in California may recall the economic recession that began in 2008 infamously started with the collapse of Lehman Brothers. Yet as many households consider debt solutions resulting from the weak economy, it may surprise a lot of people to learn that the restructuring of Lehman is still ongoing. The firm is undergoing restructuring to offload its assets and repay creditors. Once this is done, the firm will cease to exist.

So far, Lehman has spent more than $1 billion in fees while undergoing bankruptcy, including attorney fees of more than $34 million in August alone. If not pursued with due diligence, bankruptcy can be an expensive process, and Lehman is currently the most expensive bankruptcy in American history. When it filed for bankruptcy in September 2008, Lehman listed assets of well over $600 billion. It still holds cash and investments of just over $25 billion and the managers of the restructuring process hope to sell up to $65 billion in assets next year.

Lehman, though, still owes creditors an estimated $300 billion. That results in a significant shortfall and creditors must approve any final settlement. However, most creditors will have to accept payments much smaller than what they are owed.

The example of Lehman arguably provides some important lessons for those in California filing for bankruptcy and considering debt solutions. Although Lehman will cease to exist after its process is complete, the same is not true for all types of bankruptcy. For individuals, bankruptcy offers a chance to start anew with no debt. For business, there are different types of bankruptcy available and there are some that allow the business to restructure debt and operations so as to become a more efficient company.

Source: The Bloomberg, "Lehman Paid Managers, Lawyers $34.6 Million in August,$1.4 Billion So Far," Linda Sandler, Sept. 21, 2011