Bankruptcy & Restructuring – Planning For Failure

The sudden collapse of Lehman Brothers in September 2008 sent shockwaves around the globe. As the largest insolvency in history, Lehman's collapse was a pivotal moment in the 2007-2008 financial crisis and a startling illustration of the fragility of an outwardly robust institution and system. A failure to recognise and act upon early signs of distress turned what might have been a controlled descent into a freefall.

The risk that the failure of a systematically important financial institution will affect the global economy is not new: the Panic of 1825 provides an early example. Policymakers have, however, reacted vigorously to the global financial crisis. One such response is that many jurisdictions have implemented or are planning to implement regulations requiring financial institutions to adopt pre-emptive recovery plans. A pre-emptive recovery plan is a document prepared by a financial institution that considers risks that could lead to an institution