Legal News

Comparing Lehman?s Misfortunes to Katrina: A Wise Legal Maneuver?

By Dan Slater

Employees move boxes out of the Lehman Brothers on 7th Ave. the day after the Lehman filed for Chapter 11 protection. Photo: Brian Zak/Sipa Press

Thanks to the AmLaw Daily, who braved the standing-room-only crowd in Lower Manhattan, we’ve got some good dirt on what went down at yesterday’s Lehman bankruptcy hearing.

A New Orleans woman moves into a shelter in Orange, Texas, on Friday, Sept. 9, 2005, after Hurricane Katrina. (AP/ Mark M. Hancock)

The highlight of the hearing, which was over a motion seeking disclosure of Lehman records linked to cash transfers in the month before the bank filed for Chapter 11, seems to have been a comment made by Lehman’s bankruptcy counsel, Weil Gotshal’s Harvey Miller.

He reportedly told the court that the government’s decision to turn its back on Lehman showed “a lack of foresight” that reminded him of “the federal government’s reaction to Katrina.”

“That’s how it will be recorded in the history books,” Miller reportedly said.

We imagine there must be some bankruptcy advantage to arguing that Lehman’s troubles resulted from government inaction. Whether it’s effective advocacy is another question. You tell us, LB Readers, does Miller help or hurt his case by drawing a line between the failure of a bank and one of the most devastating natural disasters in modern times?

Full post as published by Law Blog - WSJ.com on October 17, 2008 (boomark / email).