This update concerns the recent hearing in the High Court to determine the treatment of certain money received by LBIE after the time it entered administration ("Post-Administration Money"). Further background to the Application is set out in our updates of 17 July 2009, 18 September 2009, 2 October 2009 and 14 October 2009. The Joint Administrators sought directions from the Court on this issue as a result of the uncertainty surrounding the competing interests of trust property claimants and the general estate.
As mentioned in our update of 14 October 2009, the hearing of the Application took place before Mr Justice Briggs at the Royal Courts of Justice from 6-8 October 2009. Submissions were made by RAB Market Cycles (Master) Fund Limited as prime brokerage client respondent and Hong Leong Bank Berhad ("HLBB") as representative respondent for the general estate creditors. The Joint Administrators also made submissions.
Mr Justice Briggs gave judgment on the Application on 21 October 2009. He found in favour of the prime brokerage client respondent, holding that Post-Administration Money which is the subject of the Application is held on trust by LBIE for the relevant client and should not be treated as LBIE money forming part of the general estate. HLBB, the representative respondent for the general estate, has not sought permission to appeal.
The judgment gives helpful guidance to the Joint Administrators in the return of Post-Administration Monies to affected prime brokerage clients. However, the Joint Administrators will not necessarily be able to make payments of Post-Administration Money straight away: appropriate steps need to be undertaken on a client by client basis to establish the entitlement to both the Post-Administration Money and any security in respect of which such money has been paid and received by LBIE. The judgment does not deal with Post-Administration Money which has not been received by LBIE.
A copy of the Order made by Mr Justice Briggs is available here.
Please direct any questions you may have with respect to the above to clientpositionresponses@lbia-eu.com.
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