From the BBC:
Preparations have been made for Lehman Brothers, the substantial US investment bank, to obtain protection from its creditors under US Chapter 11 insolvency procedures.
I have also learned that PWC, the leading accountancy firm, has been lined up to run the UK operations of Lehman in the event that it is put into administration under our insolvency arrangements.
The preparations for insolvency protection have been made because the US authorities have become gloomy that Lehman can be rescued.
"The only thing that can prevent Lehman collapsing would be a huge injection of taxpayers' money" said a banker close to the rescue negotiation. "Hank Paulson [the US Treasury Secretary] has made it clear he doesn't want to do that."
If Lehman is put into Chapter 11 tonight, the impact on global markets tomorrow could be very significant....
Sometime before midnight US time, Lehman is expected to file for Chapter 11 and go into administration over here.
I have been told that its executives are seeing the New York Fed right now to investigate whether it can borrow several billion dollars so that it can go into an orderly liquidation as an alternative to formal insolvency.
But Lehman executives do not expect the Fed to give them the funding that would be required, so they assume their business will formally collapse.
The implications will be huge. If the new controllers of the business in insolvency feel obliged to sell assets, that could do severe damage to other banks, because there would be a sharp fall in the market value of those assets....MORE