LEHMAN’S P.R. FIRM IS OWED $400,000

The Lehman Brothers bankruptcy has not only ensnared some of the world’s largest financial institutions, it is also causing problems for Wall Street public-relations legend Gershon Kekst.

Kekst, a longtime adviser to dealmakers including billionaire Henry Kravis and ex-Citigroup chief Sandy Weill, is being stuck with an unpaid $400,000 bill for providing Lehman and then-chief Dick Fuld with crisis p.r. as the storied investment bank sank into bankruptcy, according to sources with knowledge of the situation.

The 73-year-old pioneer’s firm, Kekst & Co., has not yet filed a claim with the court handling Lehman’s bankruptcy, but is expected to be among hundreds of smaller creditors filing claims in the coming weeks.

In July, advertising giant Publicis bought Kekst, which has advised on 98 deals this year worth $199 billion, for a reported $150 million.

Kekst had been on retainer with Lehman for more than a year, but worked more actively with the investment bank over the summer, and even had advisers at the investment bank’s offices bolstering Lehman’s own in-house p.r. team, sources said.

However, Kekst’s bills went unpaid for several months, sources said, in part because of turnover in Lehman’s communications department.

Sources said Lehman was expected to pay Kekst in full about a week before the financial firm pre-announced earnings on Sept. 11, but the check never came.

Kekst requested payment again right before Lehman filed for bankruptcy on Sunday, September 14, but Lehman’s board of directors, knowing they were on the verge of filing for Chapter 11 bankruptcy protection, couldn’t legally pay anything to anyone.

Officials from Kekst said, “as a matter of policy, we don’t discuss current or former client matters.” A spokeswoman for Lehman also declined to comment.