The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Lehman Brothers Bankruptcy, What Lessons can be Drawn?

  • Thomas J. FitzpatrickIV
  • James B. Thomson
Reference work entry


There is disagreement about whether large and complex financial institutions should be allowed to use US bankruptcy law to reorganise when they get into financial difficulty. We look at the events surrounding the Lehman Brothers bankruptcy filing for lessons as to whether bankruptcy law could be used to produce an orderly windup of the affairs of a failed financial firm. If so, then judicial resolution under the US Bankruptcy Code might be a better alternative to bailouts or to resolution under the Dodd–Frank Act’s orderly liquidation authority. We find that there is no clear evidence that bankruptcy law is insufficient to handle the resolution of large complex financial firms.


Bankruptcy Causation Contagion Dodd–Frank Insolvency Orderly resolution authority 

JEL Classifications

E44 G01 O11 K20 K22 G28 G38 G18 G21 G28 N12 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Thomas J. FitzpatrickIV
    • 1
  • James B. Thomson
    • 1
  1. 1.