Linklaters has advised on the latest major developments in the large scale and long running insolvency of Lehman Brothers.
In what Tony Lomas of PwC has described as a landmark moment, our client Lehman Brother International (Europe) (in administration) (LBIE) has signed a settlement agreement and proposed a distribution plan which will return some $9bn of assets to its customers and substantially increase the overall level of recovery in its general creditors.
The distribution proposal is a completely innovative approach developed by Linklaters with PwC to overcome a number of unprecedented issues and avoid unnecessary further delay and cost. Should the settlement and distribution be approved, the scale of these arrangements break several records. It is the largest single recovery into LBIE. The Securities Investors Protection Act (SIPA) insolvency of Lehman Brothers Inc. (LBI) is the largest SIPA insolvency ever and the LBIE claim against LBI is the largest customer claim into a SIPA insolvency in history.
David Ereira, Restructuring & Insolvency Partner comments:
“This development is a vital step towards bringing this aspect of the Lehman insolvency to a conclusion. This plan if adopted will lead to the rapid and substantially complete satisfaction of all claims for customer assets. The return of customer assets has from the outset been one of the primary objectives of the administrators. By achieving a return of customer assets at the levels currently anticipated the administrators will have achieved a remarkable outcome for customers of LBIE ”
The next phases will be customer approval of the proposal, which is currently scheduled for Tuesday 26 March and U.S. court approval of the settlement, which is currently scheduled for a hearing on Tuesday 16 April.
Linklaters Partners David Ereira, Tony Bugg, Richard Holden (in London) and James Warnot (in New York) have led the legal advice for this development, alongside co-counsel Davis Polk in New York with regard to aspects of the settlement.
