I suspect I may have been alone amongst viewers of the recent Singapore Grand Prix in that, rather than marvelling at the brilliance of Sebastian Vettel’s driving skills, my thoughts instead were on the world’s largest bankruptcy – Lehman Brothers. For those who have not been living and breathing the consequences of the financial sector’s greatest ever failure, the link between the cars and glamour of F1 and an insolvent investment bank may not be immediately obvious. However if you were to know that Lehman Brothers is still the second largest shareholder in the sport, with a 15.3 per cent stake in Formula One’s holding company, then the connection becomes clearer. Given the fourth anniversary of the bank’s demise was a few days ago, it is also a good time to think about how far we’ve come since the dark days of Autumn 2008, a time when many thought the world as we knew it was coming to an end. So, four years on, what have we learnt? Well firstly, that when a bank like Lehman Brothers goes down, it goes down hard. The bankruptcy in the US alone, measured in terms of pre-petition assets (around $690 billion) was over twice as large as the next largest bankruptcy (Washington Mutual at around $330 billion) and greater than the next five largest put together. It’s also proven costly to put right – the US estate has already run up over $1.73 billion of advisers’ fees, much of it in negotiating the 67,000 proofs of claim filed by angry creditors. In England, the Lehman estate is expecting anything between £15-48 billion of unsecured claims over projected recoveries of between £9.5–13.4 billion with administrators’ fees already north of £500 million. So there’s clearly been significant financial fall-out. But what of the legal consequences? The bankruptcies in the US and England have brought the respective insolvency regimes – US Chapter 11 protection and the English administration, into sharp focus. In New York, the safe harbours from the automatic stay have been construed narrowly by the bankruptcy court – notably in the Dante and Metavante cases – giving the bankruptcy, not unexpectedly, a decidedly debtor-friendly flavour. In England, the anti-deprivation principle (in loose terms, the counterpart to the US automatic stay) has also been the subject of judicial attention; but on similar facts in both instances (the Supreme Court decision in Belmont Park and the Court of Appeal decision in Firth Rixson), the English courts have reached the opposite conclusions to their US counterparts. Parties would be wise to consider these positions when considering the governing law and jurisdiction clauses in future transactions. In the structured finance space, the requirement on a note issuer to obtain noteholder approval, and its actual ability to achieve this, has been a crucial factor for those advising on the restructuring of capital transactions tainted by Lehman’s defaults. The complexity of the issues facing the parties in these scenarios (and in particular Lehman-arranged securitisations) has certainly strained the apparatus put in place at the inception of the deals for dealing with these problems. The advent of negative consent-type approaches is one way that parties have been trying to tackle the inadequacies of the existing systems but it is not without its difficulties. This is certainly an area in which further reform would be welcome. Procedurally too, there have been significant ramifications of Lehman’s failure. In the US, new claims filing procedures have been formulated to cope with bankruptcies of the size of Lehman Brothers and special ADR procedures have been established to take account of, for example, the special status of SPV trustees. Meanwhile over in England the Investment Bank Special Administration Regulations 2011 have come into force, shifting the focus of the administration to address the consequences of a large bank collapse more effectively, in particular in relation to client assets. So, how much longer will this all last? Ultimately, it will depend on the complexity of the disputes and the location of the relevant debtors. However, it would be sensible to prepare for a long ride home. Whilst the US estate gears up for its second distribution to creditors on 1 October, the administration in England has only just passed its bar date for making claims and the administrators, PwC, have grimly predicted that the clean-up could last 20 years. So, Sebastian, if you’re reading this, that puts us at lap 12 of 61. Time for a pit stop?