- Lehman Brothers Holdings Inc., the New York-based investment bank that has fired about 4,000 workers since March, notified some former employees that severance payments were cut off because of the company's bankruptcy.
``Lehman Brothers is unfortunately no longer able to provide the salary continuation or other payments described in your separation agreement,'' the firm told former workers in a letter dated Sept. 30, according to three people with copies of the correspondence. ``As a result you will not receive a payment on Oct. 3 or after,'' the letter said.
Lehman, once the fourth-largest U.S. securities firm, filed for bankruptcy protection on Sept. 15 after taking $13.8 billion in asset writedowns and credit losses in the past year. Chief Executive Officer Richard Fuld told a congressional committee yesterday the firm was overwhelmed by a ``storm of fear.''
One person who worked for Lehman for 12 years and who declined to be identified because of a confidentiality agreement said the firm had reneged on its promise to pay monthly severance checks until August 2009. It isn't clear how many ex- Lehman employees are affected by the decision. Lehman spokesman Hugh Burns wasn't immediately available for comment.
Workers who lost their severance may be able to seek the remainder of the payments by filing claims with the bankruptcy court overseeing Lehman's case in New York, according to the letter. A deadline to file the claims hasn't been set, the letter said.
Health benefits that are part of the severance agreement will continue, though Lehman no longer will pay a portion of the cost, according to the letter. The former employees will receive monthly bills, the letter said.
Severance Terms
Employees who lost their jobs before Sept. 15 have generally been offered a severance payment, the Lehman former employees said. U.S. workers were entitled to two months of notice and two weeks of severance for each year of employment.
Those who worked for the securities firm at least 10 years were entitled to as much as three weeks of salary for each year of employment, the former employees said.
When Lehman filed for bankruptcy, it had about 25,000 employees, $639 billion of assets and $613 billion of debts. On Sept. 17, Barclays Plc agreed to buy Lehman's investment-banking and capital-markets operations in the Americas, including its headquarters in New York, for $1.54 billion.
As part of the deal, the U.K.'s third-largest bank temporarily extended employment to about 10,000 Lehman's employees in the region for three months, where it had 5,000 workers before the Lehman acquisition.
In documents submitted to a federal bankruptcy court in New York, Barclays listed $2.5 billion being set aside for potential severance and retention costs. Barclays spokesman Peter Truell declined to comment.
