Extended Lien Application - 27/07/2011

Certain of the agreements between LBIE and its Affiliates which may assert or have ownership claims to securities held by LBIE (“Ownership Affiliates”) contain provisions which confer upon LBIE lien and other security entitlements (“Security Provisions”) in relation to the assets in order to recover debts owed by Ownership Affiliates to LBIE or to other Affiliates (“Creditor Affiliates”).  A list of the Ownership Affiliates is available here (updated as of 27/7/11). Some Creditor Affiliates have contended that LBIE owes duties to them to exercise, on their behalf and at their request, rights conferred upon LBIE by the Security Provisions.  Such claims by Creditor Affiliates are referred to as “extended lien claims”

Before the Joint Administrators are able to return any assets affected by extended lien claims to Ownership Affiliates, the Joint Administrators wish to seek to resolve the existence and merits of extended lien claims.  The Joint Administrators have made an Application to the English High Court for directions concerning the existence and merits of extended lien claims.  A copy of the Application Notice is available here.

At the hearing of the Application on 15 July 2011, the Court made directions for the provision of relevant agreements containing Security Provisions to Creditor Affiliates.  Accordingly, if you are a Creditor Affiliate and would like to receive copies of the relevant agreements, please contact us using the email address referred to below identifying the Ownership Affiliates of which you are a creditor.

As a result of the order made by the Court, the Joint Administrators can, subject to certain requirements, distribute or appropriate assets held for Ownership Affiliates where the Joint Administrators are not aware of any agreements containing Security Provisions (which may give rise to extended lien claims).  The Joint Administrators are therefore preparing to distribute or appropriate assets in relation to the Ownership Affiliates listed here.  We will contact these Ownership Affiliates directly as regards the requirements that apply to them for the distribution or appropriation of assets and any other issues that require resolution prior to a distribution taking place.  You should let us know if you believe there are in fact agreements containing Security Provisions in respect of assets held by LBIE for these Ownership Affiliates. 

As regards the assets held by LBIE for Ownership Affiliates where the Joint Administrators are aware of Security Provisions and are therefore not able, at this stage, to distribute or appropriate those assets, the Application will continue to determine the merits of potential extended lien claims.  The Court has ordered a timetable for the conduct of the Application and the matter will be listed for a further hearing on a date towards the end of the year.  We will publish the hearing date on this website once it is confirmed.

If you would like a copy of the main witness statement accompanying the Application or the supplemental witness statements dated 1 July 2011 and 13 July 2011, or you require any other information, please send an email to extendedlienclaims@lbia-eu.com. For logistical reasons, all future updates relevant to the Application will be published on this website only. We therefore suggest that you consult this website on a regular basis.