Lehman Brothers International (Europe) (in administration) - client money and assets update 26/02/09

Court application in respect of Trust Property

The Joint Administrators (the "Administrators") of Lehman Brothers International (Europe) (in administration) ("LBIE") continue to address the return of Trust Property as a matter of priority.  They continue to review, and seek to adopt, the most appropriate mechanisms available to them to assist in returning Trust Property to those to whom it belongs. In this context the Joint Administrators have filed with the Court an application in relation to Trust Property.

TheCourt application (which is to be heard at 10:30am on 16 March 2009 in Court 56 at the Royal Courts of Justice) gives an opportunity for the Administrators to provide an update as regards the progress that has been made in relation to Trust Property and to explain some of the difficulties which they continue to face as regards returning Trust Property to clients. The Administrators will also explain their intention to explore the possibility of proposing a scheme of arrangement in respect of Trust Property. The application seeks an Order that:

1. the Administrators be at liberty to propose a scheme of arrangement under Part 26 of the Companies Act 2006 between LBIE and persons who are its creditors in relation to Trust Property; and
2. to the extent that the Administrators are ultimately unable to recover out of the Trust Property their reasonable remuneration, costs and expenses incurred in dealing with Trust Property, whether pursuant to the proposed scheme of arrangement or otherwise, they shall be so paid and indemnified out of the assets of LBIE.

A copy of the Application Notice can be accessed by clicking here.

The Administrators have filed a detailed witness statement in support of the application, a copy of which can be accessed by clicking here. The exhibit to the witness statement can be accessed by clicking here. As explained in the witness statement, the Administrators have, with the approval of the Creditors' Committee, established a working group with whom they are discussing the feasibility and scope of any scheme of arrangement.  These deliberations are at an early stage and further updates will be provided in due course.

In addition to explaining why the Administrators consider it appropriate to explore the possibility of a scheme of arrangement, the witness statement provides a detailed update as regards the progress that has been made in respect of both Trust Assets and Client Money since the Court Order made on 7 October 2008 (click here for details) in relation to Trust Property.

A further update will follow once the Administrators' application has been determined by the Court. The hearing of the application will be public. Any person with an interest in the subject matter may attend or, if they so wish, appear. No respondents have been served the application. If you do intend to make any representations the Administrators would appreciate it if you could provide them with advance notice of your intention to do so by contacting susan.roscoe@linklaters.com.

16/03/09 update: A short further witness statement was filed in relation to this application on 13/03/09. The further statement explains the Administrators' thinking in relation to the potential scheme of arrangement since the filing of the detailed statement referred to above and the feedback received from various parties. It also outlines the manner in which the present Court application has been publicised (i.e. via this website). A copy of this short further statement (plus the relevant exhibit) can be accessed by clicking here.