HEDGE FUNDS and institutions could be forced this week to write down billions of dollars related to trading positions that were frozen when Lehman Brothers was put into administration two weeks ago.

More than 90,000 trades worth $13.9 billion (£7.6 billion) were left unsettled when Lehman collapsed and it will take “many months or years” to sift through the wreckage, said Tony Lomas, the lead administrator at Price Waterhouse Coopers (PWC). Until every counterparty’s position is determined, PWC said it would be unable to remunerate creditors or settle trades. “We have to be fair to all creditors,” Lomas said. “It will take months, even years.”

For some hedge funds already nursing heavy losses from the volatility of recent weeks and a ban on short-sell-ing, the slow pace of Lehman’s unwinding will do damage. Tomorrow the industry must send its quarterly valuation figures to investors. “They will need to form a view on the value of their relative position with us,” Lomas said. Many are expected to write down the value of their trades substantially, or to zero.

Lomas said that about 30 hedge funds made urgent pleas for the return of shares or cash. Complicating PWC’s task is a $27 billion negative position that Lehman has in borrowed stock. When the European business collapsed, it had $87 billion worth of stock on loan, versus $60 billion it had lent out. PWC has offered to cancel trades with counter-parties on a bilateral basis, but has refused to do so wholesale.

Efforts to sell the rest of the business continue, though talks for its fixed-income business ran aground after Nomura failed to table an offer by Friday’s deadline. No other bidders have emerged. PWC is also negotiating with potential buyers for Lehman Brothers Asset Management, which looks after $3.5 billion of funds.

PWC will also seek to unload Capstone, a 400-employee business that services the array of special-purpose vehicles set up by Lehman.

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