Lehman Brothers' bankruptcy (part-I)

Bankruptcy is a legally declared inability of an individual or organization to pay their creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).

Now, lets get back into the actual story and know what actually happened.A Korean Development Bank(KDB) was considering buying 25% stake in Lehman Brothers.This resulted in the plunge down of shares of Lehman Brothers to 52% amid worries and the investment bank was finding difficult to find new investors and raise capital.Lehman Brothers says it lost $3.9 billion in its fiscal third quarter and plans a number of moves to shore up its balance sheet. The firm says it will consider all "strategic alternatives," a Wall Street synonym for seeking a buyer.The Federal Reserve Bank of New York holds an emergency meeting with top Washington policymakers and major financial institutions to discuss Lehman Brothers' future, as the firm struggles to find a buyer.After a weekend of furious negotiations, U.S. regulators make it clear there will be no government bailout of Lehman Brothers. Fearful of the likely fallout from a Lehman failure, Merrill Lynch & Co. arranges a hasty deal to be bought by Bank of America Corp. for $50 billion in stock. Lehman Brothers is forced to declare bankruptcy, the largest ever in the United States.