Client Asset Update - Transfer of Trust Asset Claims - 23/12/2010 (as revised 17/1/2011)

This update outlines the process the Joint Administrators have been developing with respect to a counterparty’s potential transfer of a trust asset claim(s) against Lehman Brothers International (Europe) (in administration) (“LBIE”). 

The Joint Administrators’ aim is to provide a clear and consistent approach to trust asset transfers.

The information below is an overview of the process including the requirements should a trust asset counterparty (“Transferor”) wish to make a request to transfer a trust asset claim to a third party (“Transferee”).  Please see the attached Guidance Document for a more detailed explanation of the process and the issues for consideration.

Process

The Transferor should provide LBIE with a written transfer request along with the required supporting documentation. A PDF version of the form that must be used to submit a transfer request is attached here and details of the required documentation are found in the Guidance Document.  The request should be sent to generalqueries@lbia-eu.com.  LBIE will not commence its due diligence review until all documentation has been received.

Please note that each transfer request is unique and requires a thorough review involving due diligence of a commercial, legal and compliance nature, which in some cases will require the Transferor and/or Transferee to provide LBIE with further information.  LBIE is not in a position to declare with any certainty the timeframe it will take to process a transfer request.

Following LBIE’s due diligence review of the documents provided, the Transferor will receive either (i) a letter setting out the terms and conditions on which LBIE will agree to recognise the transfer (which will need to be executed by both the Transferor and the Transferee); or (ii) an email notification rejecting the Transferor’s transfer request. 

Points to Note

For reasons of confidentiality, until recognition LBIE will only communicate with the Transferor in respect of a request to transfer a trust asset claim.

LBIE will only agree to recognise a transfer of trust assets on the condition that the transfer is in respect of the entirety of the Transferor’s claims, rights, obligations and liabilities with LBIE (whether pursuant to contractual ‎arrangements or otherwise)‎. ‎

The Transferor must ensure it complies with all provisions concerning transfers as stated in its pre-administration agreements with LBIE, including obtaining any consent required from a third party. Transferors and Transferees should note that the aforementioned consent of parties (other than LBIE) is generally required on the Customer Account Agreement and the Margin Lending Agreement. However, they should each review their contracts and take advice from their own legal counsel where appropriate.

A signatory to the Claim Resolution Agreement (“CRA”) must ensure it complies with all provisions of the CRA concerning transfers.  More generally, Transferors and Transferees should familiarise themselves with the terms of the CRA and take their own legal advice as they deem necessary to ensure they fully understand the obligations they will undertake.

Please note that prior to any recognition by LBIE of a Transfer Request, LBIE shall only make any and all payments, distributions and/or other benefits to the Transferor.

Given the complexity and uncertainties that exist with regards to the underlying documents, it may not be practicable for a Transferor to transfer their trust asset claim. LBIE is aware that certain claimants have adopted alternative mechanisms (e.g. sub-participation) to achieve the commercial objectives of a transfer but which do not require the assignment of legal title, thereby ‎avoiding the process set out in this update and the Guidance Document.

Please note that by providing this information neither LBIE, its administrators, their firm, employees nor their representatives are giving a recommendation, referral, or are providing you with advice. You should not rely on it as such. You must make your own, independent decision on such matters based upon your own judgement and upon advice from such advisers as you have deemed necessary.

Should you have any queries regarding this update, please contact LBIE’s Communications and Counterparty Management team at generalqueries@lbia-eu.com.  The Joint Administrators will continue to communicate with you through this website on all matters relating to the administration of LBIE.