Linklaters has advised PWC, the administrators of Lehman Brothers International (Europe) (LBIE), on a critical milestone in the Lehman Brothers administration.
An agreement in principle has now been reached to resolve all claims between Lehman Brothers Inc. (LBI) and Lehman Brothers International (Europe) (LBIE) totalling US$38bn, paving the way for assets to be distributed to customers and creditors.
The agreement is subject to documentation, approval by the U.S. Bankruptcy Judge, the Honorable James M. Peck, and an order of the English High Court. If approved, the agreement will allow the Trustee and Joint Administrators to proceed with plans to allocate and distribute assets to customers and creditors. Under the settlement, LBIE’s customers will benefit from the return of customer property of US$7.5bn (valued as of September 2008) and further cash of at least US$600m. LBIE’s own estate will receive a cash customer distribution of US$0.5bn and a general claim of a further US$4 bn. LBI will effectively drop all its claims into LBIE.
The Administrators are preparing arrangements for the distribution of these assets to LBIE’s customers.
Linklaters Restructuring and Insolvency partner David Ereira, said:
“This agreement shows that even the most complex and enormous inter-affiliate disputes can be resolved. This is the single largest step in the resolution of the LBIE administration to date. It is the culmination of over 4 years of continuous effort and work by the Administrators and the Linklaters team. It will bring to an end the wait for the return of customer assets held within the US process and assist in the distribution to LBIE’s creditors.”
Linklaters’ team was led jointly by Global Head of Restructuring and Insolvency, Tony Bugg, Restructuring and Insolvency partner David Ereira and included partners Jim Warnot and Paul Hessler and senior US associate Aaron Javian in New York.
