What's left of Lehman: A plan

NEW YORK (CNNMoney.com) -- The battered financial services firm Lehman Brothers Holdings has submitted a proposal with the U.S. Bankruptcy Court in New York to resolve the biggest Chapter 11 filing in Wall Street history.

In its proposal filed Monday, Lehman laid out its plan to place its remaining assets under control of a newly formed subsidiary called LAMCO, which would serve as asset manager.

"LAMCO will enable the debtors to capitalize on existing infrastructure for the management of long-term investments and illiquid assets, and will also provide long-term employment opportunities for the debtors' employees," said the document filed by Lehman Brothers.

The company said it developed LAMCO to specialize "in the management of commercial real estate, residential mortgages, principal investments and private equity, corporate debt and derivatives assets."

The plan requires bankruptcy court approval.

Lehman Brothers filed for bankruptcy on Sept. 15, 2008 with the U.S. Bankruptcy Court in the Southern District of New York. The filing capped a 95% slide in the firm's stock price and unleashed a crisis of confidence that threw financial markets worldwide into turmoil, sparking the worst crisis since the Great Depression.

The bankruptcy process itself has cost Lehman $642 million.

Lehman said the plan avoids "the potential enormous costs and extended time that would otherwise be incurred in connection with the litigation of the multifaceted and complex issues associated with these extraordinary cases."

The proposal also said that it "represents a fair economic resolution for all the debtors' claimants that will expedite the administration of the debtors' Chapter 11 cases and accelerate recoveries to creditors."

Last Friday, court-appointed examiner Anton Valukas released a report lambasting Lehman executives and the firm's auditor for actions that led to the collapse of Lehman, which unleashed the worst of the financial crisis.

The report referred to former Chief Executive Richard Fuld as "at least grossly negligent in causing Lehman to file misleading periodic reports" that helped lead to its collapse.

Fuld's lawyer, Patricia Hynes, said that Fuld was unaware of the questionable accounting activity cited in the examiner's report. Charlie Perkins, spokesman for the auditor, Ernst & Young, also made statements distancing the firm from activity leading to Lehman's downfall.