Request Dropped for Drexel Examiner

The lead creditor to Drexel Burnham Lambert Group Inc. withdrew a request Tuesday for a court-appointed examiner in the bankruptcy case, as the two sides neared a deal about who should manage the dissolution of the Wall Street firm.

The firm and its creditors were negotiating about a proposal to allow a triumvirate of Drexel board members to oversee the firm, with input from creditors, as it liquidates under Chapter 11 bankruptcy proceedings.

The decision by lead creditor First City Bancorp. of Texas to withdraw its request for an examiner was a sign the Drexel board members were likely to continue directing the liquidation.

Drexel’s creditors had sought an examiner in the case because of concerns about the rapid liquidation of billions of dollars in securities holdings and other assets by Drexel Burnham Lambert Inc., the brokerage subsidiary.

The brokerage firm is not subject to bankruptcy court proceedings but the asset sales, the movement of capital from the subsidiary to the parent company prior to the collapse and other links prompted anxious creditors to seek an examiner.

In a bid to prevent the appointment, which Drexel officials contended would hamstring the company’s day-to-day management, Drexel asked U.S. District Judge Howard Buschman III to allow three board members led by Chairman John S. R. Shad to oversee the dismantling of the parent and all subsidiaries.