US investment bank Lehman Brothers has announced plans for bankruptcy protection in New York after all rescue attempts failed.
The news has sparked panic in the world’s stock markets with big falls in Asia and in the UK, where the FTSE opened more than 100 points down.
The Bank of England says it will be monitoring the fall-out and is ready to intervene if it causes fresh chaos in the money markets.
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Lehman – America’s fourth biggest investment bank – is to file a petition under Chapter 11 of the US Bankruptcy Code.
This usually allows companies to reorganise their contractual and debt obligations under the supervision of a bankruptcy court.
There had been a series of last-minute meetings in New York to try and save the 150-year-old institution.
- A d v e r t i s e m e n t
But two potential buyers pulled out of a rescue deal and the Bush administration refused to bail out the stricken firm with taxpayers’ money.