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Lehman Brothers International (Europe) – in administration – 30 month progress update
The Joint Administrators of Lehman Brothers International (Europe) – in administration (“LBIE”) have today updated the creditor community with details of their progress in the last six month period of the Administration.
Tony Lomas, joint administrator and partner at PwC said:
“Very significant progress has been made over the past six months. A further £2.1bn of Client assets have been returned to their owners, making a total of almost £13bn to date, and another £1.6bn of House assets have been realised, bringing total realisations to £10.7bn. Some major litigation also took place in the period, in respect of which a number of important legal appeals will be heard over the course of the rest of the year. The outcome of these proceedings will materially influence the value of the eventual recovery for ordinary unsecured creditors.
"Some of the most substantial issues that need to be resolved relate to claims being made between a small number of Lehman group companies, with the outcomes materially benefitting creditors in one estate, to the cost of creditors in another. This situation arises from the huge volumes and value of transactions that were traded between affiliates before the group collapsed, combined with the immense complexity of the contractual arrangements.
"We continue to work very hard on the agreement of creditor claims, the tracing of proprietary rights and the identification of Client Money entitlements, whilst the various related legal actions continue, in order to expedite the payment of a first interim distribution to unsecured creditors.”
Key achievements to date:
- A Consensual Approach for the agreement of unsecured claims has been launched and we are close to having issued the first 100 Claims Determination Deeds to creditors with an aggregate claims value of approximately £1.1bn. Some £0.4bn of claims have now been formally agreed in respect of this;
- We have concluded a major change programme to achieve full independence of the IT and infrastructure service provisions from Nomura and BarCap. The related terms of service agreements have been concluded ahead of schedule resulting in an annual cost saving of some £15m;
- Our legal action to confirm ownership of various assets held by LBIE but claimed by affiliates (The ‘RASCALS’ litigation) was found in favour of LBIE at first instance. Appeals have been lodged and will be heard in October 2011;
- The appeal hearing in the UK Supreme Court of the Appeal Court judgement in relation to pre-administration Client Money is scheduled for October 2011. The administrators have also filed a UK court directions application in respect of the legal principles to be applied in order to identify and trace pre-admin client money in LBIE house accounts in advance of the appeal hearing which will be heard at the beginning of 2012.
On top of the good progress being made on the administration, we are also operating a fully functioning workforce at Lehman Brothers in administration.
Jane Woolcott, joint COO of LBIE and PwC partner explains:
"People may be surprised to learn that we continue to employ nearly 500 Lehman employees and contractors who are crucial to the administrators’ efforts to wind the business down and return money to creditors.
"Most of the staff working at Lehmans have been with us since the beginning of the administration and continue to enjoy the benefits of working for a fully functioning investment bank. They have full access to learning and development and we continue to run competitive development schemes with all the reward and promotional opportunities and benefits you would find in any other company in Canary Wharf. In the last six months alone, we have recruited 45 staff and look to replace PwC staff with experienced external hires wherever possible. We also currently have eight employees on maternity leave and fully expect them to rejoin us when their maternity leave is completed."
1. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, were appointed as joint administrators to Lehman Brothers International Europe and other related entities on 15 September 2008. By an Order made on 30 November 2009 in the High Court, a change was made to the named individuals appointed as Administrators of the Lehman Brothers companies in English Administration . With effect from 30 November, the same five PwC partners are the Administrators of all 19 companies; the five are Tony Lomas, Steven Pearson, Dan Schwarzmann, Mike Jervis and Derek Howell, all of whom are licensed to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.
2. The Joint Administrators have been appointed to wind down the business in as orderly a manner as possible.
