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Welcome to Lehman Brothers. We're Open for Business


John Suckow, CEO of Lehman Brothers and an Alvarez and Marsal managing director, at Lehman Brothers offices in New York.

Photograph by Fred R. Conrad/The New York Times/Redux Pictures

John Suckow, CEO of Lehman Brothers and an Alvarez and Marsal managing director, at Lehman Brothers offices in New York.

Of the many debts that John Suckow would like to unwind from Lehman Brothers Holdings, the first might be shame.

Stigma, baggage, jokes about zombie banks back from the dead—Suckow would like to jettison all that, just as Lehman is liquidating what remains of its assets, four years after the bank’s failure sent the financial crisis into overdrive. There are deals to do, and creditors impatient to get pennies on the dollars owed them. Dwelling on the strangeness of Lehman’s ongoing existence isn’t going to get the work done faster.

“What might surprise you here a little bit,” says Suckow, Lehman’s president and chief executive officer, sitting in shirtsleeves in a conference room on the 40th floor of the Time & Life Building, “is that if you walked in and walked around these floors, this is an operating company.”

A tour of the place confirms that. What might seem bizarre to outsiders—Wait, didn’t Lehman go bust?—long ago became ordinary for the 340 or so employees who work here. Lehman exited bankruptcy in March, after three and a half years, and now exists solely to return money to creditors. The estate still controls tens of billions in assets, and if you would like to purchase any of it—a real estate property, say, or part of a private equity deal—its lawyers and traders will gladly take your business. Each transaction they complete moves the firm one step closer to shutting its doors for good, sometime around 2017. If Lehman Brothers is alive, then it is living on borrowed time.

“They’re working hard every day, even though they know they’re working themselves out of a job,” Suckow says. “That’s just a fact. But as long as we communicate properly, they know what the deal is.”

Lehman occupies one-and-a-half nondescript floors of the skyscraper, looking more or less like any other investment bank, minus some of the polish and most of the bustle. Employees work in Excel spreadsheets on dual monitors. Cubicles and offices are decorated with sports memorabilia, children’s artwork, and the odd bit of gallows humor. (Including, ahem, one magazine’s Frankenstein’s monster illustration.) The hours are kinder here than on the rest of Wall Street, with fewer all-nighters, and no one is yoked to the opening and closing bells of the stock market.

On a Tuesday morning, the phones aren’t ringing and the space is silent. Private equity staffers, seen huddling in a conference room, have a portfolio of 200 investments to manage. The real estate team tracks Lehman’s $10 billion worth of properties around the world. On Wednesday, Bloomberg reported that the company sold its interest in eight Texas office buildings. In August, it filed papers to take its largest asset, the apartment building colossus Archstone, public. The derivatives group works at unpacking a tangle of 8,000 contracts with 6,500 counterparties—a collection that once held a notional value of $39 trillion. The work is so complicated that at its peak, this was the bankrupt bank’s largest division, with 250 employees.

“From a recruiting perspective, we were building a startup company, which is pretty unique,” says Suckow. “Let me put it this way: We were not competing with Goldman or Morgan Stanley for these positions. We were actually building a whole different model here. We were not entering into new trades; we were trying to mitigate terminated trades.”

For the workers sitting in Lehman’s finance bullpen, conspicuously visible just a few hundred feet to the southwest is the former Lehman Brothers tower, at 745 Seventh Avenue. It now sports a gigantic Barclays sign and houses the investment banking division the British bank snapped up the day after Lehman’s bankruptcy. To the naked eye, it appears that if you strung a wire between the old workspace and the new, the single closest office just might be the corner unit on the 31st floor, the one that was once occupied by Lehman CEO Dick Fuld.

By the end of this year, total headcount is set to shrink to 280 and to keep falling from there. There are also 50 full-time bankruptcy consultants (including Suckow) from Alvarez & Marsal, which has so far pocketed more than half a billion dollars in fees on the case. Another $400 million has gone to the law firm Weil Gotshal.

Lehman employees live less large. With popular sentiment still running against Wall Street in general and Lehman Brothers in particular, standard banker perks such as a nice holiday party are a nonstarter. Last December, Lehman’s people rented an auditorium inside the building, on the second floor, and performed skits set in a fantasy world of Lehman’s übercomplicated (and überlitigated) derivatives contracts.

“It really is spending the creditors’ money, so we are very sensitive to that,” Suckow says. “There have been, I assure you, no lavish, fun things put on by this estate since it filed bankruptcy.”

How was Sept. 15, the fourth anniversary of Lehman’s bankruptcy, marked?

“It wasn’t,” Suckow says. “No fanfare. No party.” His view: that Sept. 15 is just a filing date, one that has a special resonance for the few dozen Lehman employees that have worked uninterrupted since before the bankruptcy—and likely had their net worth trashed—but is less important to those that have been hired since.

“I think this work experience, for a lot of these folks, is going to truly be additive,” Suckow says. “I’ve been through a lot of troubled companies in my life, and I may be kind of off-the-reservation because I am a restructuring guy, but I think everybody in their lifetime ought to go through a restructuring. They’re going to appreciate what they learn. It’s good to see the difficult side of a business.”

He knows from experience: Earlier in his career, he worked at Arthur Andersen when the accounting firm imploded in 2002. “There were employees who stayed behind at Andersen to wind down its affairs, and a lot of it was loyalty,” Suckow says. “They wanted it to be buried properly.”

For now, Lehman lives, rolling off deals, churning out fees, and returning to creditors an average of 18¢ on the dollar. At some point, the last asset will be unwound, and in the meantime, its dwindling staff has a simple request: If the outside world could just go easy on the zombie thing.

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Nick Summers covers Wall Street and finance for Bloomberg Businessweek. Twitter: @nicksummers.

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