There is life after Lehman

Kevin White's experience as a creator of debt securities is helping him value and restructure them now.

When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

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NEW YORK (Fortune) -- As head of the global structured finance syndicate at Lehman Brothers (he was promoted to a different job in 2006), Kevin White created the kind of collateralized debt securities that fueled the financial bubble -- and still bedevil many bank balance sheets.

Now White runs a firm that's doing a nice business in cleaning up the mess: Spring Hill Capital Partners specializes in buying, selling, deconstructing, and investing in structured finance products.

"The securitization process locked a lot of assets into mortgage-backed securities or CDOs," says White. "As the underlying collateral ran into trouble, the complexity of securitizations has paralyzed investors, lenders, and borrowers. But we made a lot of these products, and we're skilled at taking them apart, valuing them, and in some cases restructuring them."

White -- who sees Spring Hill as embodying the best traditions of investment banking, acting as an adviser and broker rather than taking big risks like a hedge fund -- wasted no time in setting up shop.

Lehman filed for bankruptcy on Sept. 15, 2008. White formed Spring Hill on Sept. 17 and transported a handful of Lehman refugees into new offices the next day. By Oct. 15 the phones were ringing.

Now the company, which has 20 employees, mostly from Lehman, is cash-flow positive and able to pay salaries and other expenses, which for months had been coming out of White's own pocket.

And White says that for now Spring Hill is working with people it knows, likes, and trusts. He named the firm after the dairy in Haverhill, Mass. that his grandfather worked at as a milkman for 20 years.

"He woke up at 4 am every morning," say White. "He was dedicated, loyal, and a solid citizen. That is what we as a firm want to honor."

Spring Hill's three business lines are very straightforward. The advisory business helps clients understand problems and opportunities in structured finance and commercial real estate. The broker/dealer matches buyers and sellers for structured products. And the principal investment business raises money to invest in real estate and loans.

The firm has recently been hired to restructure a $3 billion commercial real estate CDO and will work as an advisor to one of the nine firms chosen by the government to buy legacy securities from banks via the Public-Private Investment Program.

Even though Spring Hill was founded amid dark times, the firm has had some lucky breaks. For a year the firm operated out of a 10,000 square foot office space on the 41st floor of 30 Rockefeller Plaza, rent-free. Its benefactor was Barton Winokur, a partner at the law firm Dechert.

"I didn't know Kevin at all, but our mutual friend Dick Cashin [head of One Equity Partners] told me that he believed in him and that he needed help," says Winokur. "So I let him use this office space for free." Now Spring Hill is moving to more permanent (and more expensive) digs further downtown near Madison Square Park.

Other members of the Lehman Brothers Diaspora have decided to branch out on their own with advisory boutiques. Lehman's former Europe CEO, Jeremy Isaacs, and the head of global fixed income, Roger Nagioff (who had retired in February 2008), launched a firm called JRJ Ventures. Michael Tory, ex-head of British investment banking, started Ondra Partners and has hired several of his onetime colleagues in London and Stamford, Conn.

Another former exec couldn't really stay away from his old job. As the powerful head of real estate dealmaking, Mark Walsh financed buyouts like the $22 billion takeover of Archstone-Smith. Now Walsh is joining with some former Lehman hands to buy Lehman's real estate private equity unit back from the bankrupt estate and relaunch it as an independent firm.