Drexel unveils survival plan

May 11, 1991|By ASOCIATED PRESS

NEW YORK (AP) -- Drexel Burnham Lambert Inc. unveiled a plan yesterday to emerge from federal bankruptcy proceedings, 15 months after the collapse of the firm that dominated Wall Street in the 1980s.

The agreement between the firm and its main creditor groups places most of Drexel's assets into a trust fund that will be owned by creditors and those pursuing securities lawsuits.

The deal, which needs final creditor approval, also would allow Drexel to survive, first to manage its own troubled assets and then to stay in business focusing on financially ailing companies.

Drexel epitomized the high-flying 1980s but collapsed after pleading guilty to six felonies and agreeing to pay a record $650 million in penalties for crimes related to securities trading. It sought Chapter 11 protection under federal bankruptcy laws in February 1990.

A statement issued by U.S. District Judge Milton Pollack said the assets of the surviving Drexel -- known for now only as "Newco" -- are expected to have a market value of $300 million to $400 million. The firm would have just 20 employees.

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