Lehman Brothers’ 2008 bankruptcy became the largest bankruptcy filing in U.S. history.
The investment bank filed for Chapter 11 protection on September 15, 2008, after suffering enormous losses linked to mortgage-related securities and the collapse of the U.S. housing market. Its failure followed the deterioration of credit markets and the earlier rescue or sale of other major financial institutions.
Lehman’s bankruptcy intensified the global financial crisis because it was deeply connected to banks, insurers, hedge funds, and trading counterparties worldwide. Money-market funds faced heavy withdrawals, lending between financial institutions became more difficult, and stock markets plunged. The bankruptcy was not the only cause of the crisis, but it became its most recognizable turning point.
A common mix-up is confusing Lehman Brothers with Bear Stearns, which was sold to JPMorgan Chase in March 2008 with government assistance. Lehman’s collapse instead proceeded through bankruptcy, creating years of litigation and restructuring.