The bankruptcy of Lehman Bros – a mere coincidence

Ten years ago, on 15 September 2008, Professor Rosalind Mason of QUT Brisbane and I gave a paper at the INSOL Academics Group Meeting in Shanghai, China, entitled Issues surrounding recognition and enforcement of multistate bank and insurance company insolvencies.

On that very day, Lehman Brothers entered bankruptcy, prompting a complex and long-running multistate bank insolvency that has only recently been largely resolved.


Our 2008 presentation focused on the need in Australia for what we called “pre-positioning” of a bank in financial crisis, by APRA and the courts, with a view to preparing the bank’s business for transfer or shut down, with depositor’s interest protected.


Lehman Bros and other consequences of the GFC prompted the Australian government to undertake a review in 2012 of the crisis management powers of APRA and other agencies over financial institutions in Australia.  The Murray 2014 report supported the outcome of that review.

The policy behind the need for a new legal regime is explained in our chapter on Australia– Mason & Murray – in the Research Handbook on Crisis Management in the Banking Sector, Haentjens and Wessels, eds, Edward Elgar Publishing, 2015.


That new regime commenced only this year in Australia.  What might be called a regime of APRA being given powers to closely monitor and direct the business of the bank in financial crisis, and pre-positioning it for liquidation if necessary, with court management as required, was finally introduced in Australia only earlier this year.

Relevant powers were given to APRA and others in the Banking Act 1959 and other laws under the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018. APRA now has powers to closely monitor and direct the business of any bank in financial crisis, and pre-position it for liquidation if necessary, with court management as required.  

Our 2008 INSOL presentation probably had nothing to do with Lehman’s collapse, but, maybe just as a precaution, I myself was not invited back ….

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