Thousands of jobs were at risk today after the UK arm of troubled investment bank Lehman Brothers was placed into administration.
The move follows Lehman's US holding company filing for Chapter 11 bankruptcy protection this morning.
Tony Lomas, partner with administrator PricewaterhouseCoopers, said: "Because the group managed its funding on a global basis, the UK trading operation found itself unable to meet its obligations when the flow of funds dried up last night."
Lehman Brothers is thought to employ around 5,000 people in the UK.
PWC was appointed administrator of Lehman Brothers International (Europe).
It means Lehman Brothers, the principal UK trading company in the 158-year-old Lehman group, is in administration along with three other companies.
PWC said it was working to "wind down the business in as orderly a manner as possible".
Mr Lomas added: "Our priority now is to work with management and trading counterparties to agree the manner in which the assets and liabilities will be handled."
Lehman Brothers has been hit by billions of dollars-worth of sub-prime mortgage losses. Its UK collapse and US bankruptcy petition makes it the biggest casualty of the financial crisis afflicting global markets over the past year.
Lehman Brothers also run a subsidiary UK company, Capstone Mortgage Services.
Staff arriving at the offices in High Wycombe, Buckinghamshire, this morning said they did not yet know what impact the collapse would have on their jobs.
One said: "I heard the news on the radio this morning but I don't know yet what this could mean for us.
"We haven't been told anything yet so I think everyone is just turning up for work as normal."
Another woman worker said: "We are hoping for the best."
Koen Thijssen, carrying a box, was the first employee out of the building in Canary Wharf, but he said there would be more to follow.
Surrounded by camera crews and reporters and looking flustered, Mr Thijssen said: "This is it. I think it's going to be all of us."
Angela Knight, chief executive of the British Bankers' Association, said no UK banks were in a similar position to Lehman Brothers, which as an investment bank does not take retail deposits.
She said: "Lehman Brothers is a relatively small player in the UK.
"As far as UK high street banks are concerned, they have been recapitalising themselves in the last few months.
"Whilst it's not going to be a particularly comfortable day, the issue is one of a major US investment bank which has got into difficulty.
"No UK bank is in a similar situation."
In the UK, Lehman employs staff at its regional headquarters in Canary Wharf, London. It also has an office in High Wycombe, Buckinghamshire, which is a subsidiary called Capstone Mortgage Services.
As part of the UK administration, PWC said a number of Lehman group companies remained solvent and will continue to trade.
These companies include Lehman Brothers Asset Management (Europe), as well as others which manage property portfolios and loans.
Chapter 11 bankruptcy gives companies time to reorganise and work out a plan to pay creditors over time.
Under the terms of its bankruptcy petition, Lehman Brothers' holding company, Lehman Brothers Holdings International, is still pursuing the sale of its broker-dealer operations, as well as its investment management division.
Another subsidiary, Lehman Brothers Asset Management, will also not be subject to the petition.Reuse content