Poll: Dodd-Frank Wouldn’t Have Helped Lehman Creditors

A majority of respondents to an American Bankruptcy Institute poll said creditors of failed investment bank Lehman Brother Holdings Inc. wouldn’t have fared better in a post-Dodd-Frank world.

The strenuously negotiated financial reform law put into place last year gave the government the authority to orderly liquidate financial firms–a power that theoretically would have prevented Lehman’s crash into bankruptcy that many blame for intensifying the recent financial crisis.

But that likely wouldn’t have mattered much to Lehman’s unsecured creditors, said 51% of survey respondents. They answered that they either “disagreed somewhat” or “disagreed strongly” with the statement: “Had ‘orderly resolution authority’ been in place for the Lehman bankruptcy, the case would have produced a greater return to unsecured creditors.”

In contrast, 33% of respondents said they somewhat or strongly agreed with the survey’s statement, while 13% said they didn’t know or had no opinion.

Just this week, Lehman filed a revised creditor-repayment plan that offers Lehman parent company senior bondholders a recovery of 21.1 cents on the dollar. Creditors of certain Lehman subsidiaries would see a larger return under the plan.

The poll was open to any visitor to ABI’s website. The Alexandria, Va., organization counts 12,300 attorneys, judges and other bankruptcy professionals among its members.