06 Nov 2009 11:25
The UK Court of Appeal today handed down its judgment in relation to the application made by the Joint Administrators of Lehman Brothers International (Europe) (“LBIE”) to establish whether the court had jurisdiction to sanction the proposed scheme of arrangement under Part 26 of the Companies Act 2006.
The judgment reaffirmed the earlier decision of the UK High Court that as the scheme of arrangement proposed by the Administrators seeks to modify certain rights of clients whose property is held on trust by LBIE, the Court has no jurisdiction to sanction a scheme which modifies affected clients in this manner.
Steven Pearson, Joint Administrator and partner at PricewaterhouseCoopers LLP commented:
“I am disappointed by this ruling as it restricts the options available to the Administrators for the return of client assets and, in particular, the degree of protection afforded to clients who receive assets back from the Company.
"However, following the original judgment we recognised that the proposed scheme was at risk and in the meantime have worked with the creditors’ committee of LBIE to develop a credible alternative approach in order to return assets to clients using approximately the same framework of rules and timeline as was contained in the proposed scheme. These alternative proposals were outlined to affected clients during October and will be formally launched in an offer circular in the coming weeks.”
“However, unlike the proposed scheme, the alternative arrangements will only bind those clients who positively elect to sign-up. In order to benefit from these arrangements it is vital that affected clients take the time to understand what is now being are proposed and, by the end of the year, sign up to their terms.”
GLG, Ramius and Oceanwood Capital have worked with the Administrators in developing the alternative proposals.
In the interim, the Administrators are continuing to return assets to clients on a bilateral basis and have returned some $13.5bn to date.
Notes to Editors:
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.
The joint administrators have been appointed to wind down the business in as orderly a manner as possible.
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 AV Lomas, SA Pearson, DY Schwarzmann, MJA Jervis and DA Howell, all of whom are licensed to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.
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