One of the key lessons from the GFC is the danger posed by
the collapse of large and complex multi-national financial
institutions and business corporations previously deemed
‘too big to fail’. A particular challenge is unravelling the affairs
and resolving the liabilities of, and claims against, complex
global businesses. Such firms typically operate multi-product
businesses in a wide range of sectors across geographic
destinations with differing legal and regulatory requirements.
To protect against the failure of such entities and assist with
the unwinding of their affairs, there is growing demand for
firms to establish a ‘living will’.
The US$613 billion collapse of Lehman Brothers in 2008 was
the biggest bankruptcy in US history.91 The wider financial
repercussions and the complex and costly unravelling process
that followed illustrate the need for businesses to adopt a
living will.
A living will would provide a framework to conduct an orderly
unravelling of globally vast and complex organisations. The
objective is to avoid damaging the wider financial system as
well as preventing lengthy legal battles over the division of
assets and liabilities.