The administrators of Lehman Brothers International (Europe) have made an application to the High Court in connection with a scheme of arrangement with respect to certain client assets
The administrators of Lehman Brothers International (Europe) have made an application to the High Court in connection with a scheme of arrangement with respect to certain client assets held by the firm.
The scheme is intended to expedite the return of trust assets controlled by LBIE to its clients, therefore avoiding a lengthy, onerous and unpredictable process that could otherwise take years to bring to finality.
The scheme requires approval of the High Court and LBIE creditors and, should both approvals be met, will become effective by the end of October 2009. The return of trust assets should be moving forward by the first quarter of 2010.
The High Court hearing will be heard in public on the 29 and 30 July 2009 at the Royal Courts of Justice in London and will seek confirmation that the court has jurisdiction to subject creditors’ trust property to a scheme of arrangement.
On 15 September 2008 LBIE held approximately USD23bn in client assets. Since then, the administrators have returned client assets held by negotiating individual bilateral agreements with affected creditors. While this has been successful in certain cases, it has been a lengthy process, onerous on clients and it has been unable to bring finality to dealings between LBIE and its clients.
Over coming weeks the administrators will also make a further application to the High Court for meetings of creditors to be convened. At those meetings the creditors will have the opportunity to vote on the scheme of arrangement.
Steven Pearson, joint administrator of LBIE and partner at PricewaterhouseCoopers, says: ‘We are very pleased to be able to announce a fully formulated solution to the client asset issue within nine months of LBIE’s administration. The proposed scheme is a highly innovative mechanism which will enable the return of trust assets in the quickest and most efficient way. It is the result of a collaborative development process working closely with a representative group of LBIE’s clients over recent months.
‘Fundamentally, the scheme proposes a compromise on all sides to cut through the multiplicity of complex issues to deliver a fair solution. It has the unanimous support of the LBIE creditors’ committee, which contains representatives of both trust clients and general estate unsecured creditors.’
Owen Littman, general counsel for Ramius, a member of the LBIE creditors’ committee, adds: ‘The LBIE administration has been an extremely complex situation. It is only through the significant effort, experience, dedication and adaptability of the working parties that such an equitable proposal to resolve claims in a timely manner could have been brought about. By far, we believe that the scheme is the best way to address the return of client assets and we encourage LBIE clients to support it. With client support, the scheme will help to more rapidly progress this significant aspect of the LBIE administration.’
