By Emily Chasan

"We would like to be out of this situation with in 18 to 24 months," Bryan Marsal, the co-founder of turnaround firm Alvarez & Marsal and current chief executive of Lehman, said at a bankruptcy court hearing in Manhattan.

"Too many people are saying this case is going to take five to six or 10 years. There's no reason for this thing to be in bankruptcy for that amount of time," Marsal said.

Marsal has been heading a team of more than 500 to wind down operations at Lehman and said he believes the situation there is now "stable," compared with the chaos that occurred at the 150-year-old firm when it filed for bankruptcy on September 15.

But U.S. bankruptcy Judge James Peck, who has been overseeing the case, warned that Lehman would have to think globally to meet such a timeline.

Peck said that with dozens of insolvency proceedings pending around the world, the Lehman case is "undoubtedly the most massive cross-border insolvency in the history of the world," and told lawyers they should work out protocols for global issues and creditor claims to be resolved efficiently.

"I am concerned that absent some ability to tie together all of these (international) estates that we run the risk of a 'mouse that roared' problem in which some estate in some other jurisdiction may control the timing of the exit in this case," Peck said.

Lehman's bankruptcy attorney, Harvey Miller, said at the hearing that the firm has been working closely with the Lehman Brothers unit in Europe and its administrators.

RESOLVING ISSUES

Marsal took over as Lehman CEO this month after serving as the firm's chief restructuring officer for months.

As part of a status update to the court, Marsal said that after sales of Lehman's core U.S. brokerage unit, money manager Neuberger Berman, and several other assets, the company is focused on an orderly wind-down.

Marsal said Lehman had a cash balance of about $6 billion as of January 2, compared with about $3.3 billion on September 14, the day before it filed for bankruptcy protection.

Marsal said Lehman is working to maximize the recovery value of the firm's assets, by resolving its derivatives book, other claims and funding commitments, and looking to sell hard assets like real estate, art and Lehman's fleet of planes.

(Reporting by Emily Chasan, editing by Matthew Lewis)