Client money & assets update - Scheme of Arrangement - Jurisdiction Judgment Appeal - 14/09/09

This update is further to those posted on the 21 and 25 August 2009 concerning the judgment handed down by the High Court on 21 August 2009 indicating that the court does not have jurisdiction to sanction the scheme of arrangement proposed by the Joint Administrators.  Further background is set out in our update of 15 July 2009, which can be accessed here.

As explained in the 25 August update, the Joint Administrators were consulting with legal advisers and representatives of the creditor's working group regarding the intention to appeal the High Court judgment. 

Having undertaken such analysis, the Administrators have concluded that it is appropriate to appeal given the very significant advantages of a scheme of arrangement when compared with the potential alternatives, notwithstanding the complex nature of the legal arguments and that the outcome of the appeal is uncertain.  Accordingly, the Joint Administrators filed an appeal application on 10 September 2009 with the Court of Appeal.  GLG Partners LP ("GLG"), as representatives of the creditor's working group, have confirmed that they intend to submit written submissions in support of the appeal and the London Investment Banking Association ("LIBA") has confirmed that it will appear as respondent. A public hearing of the appeal will be held in due course and we shall provide a further update once the date of the hearing is known.

The Administrators are anxious that the appeal process should not lead to any unnecessary delay in the process of returning client assets. Therefore, in parallel with the appeal process, they continue to make bilateral returns and to assess possible alternative mechanisms by which they might affect the return of client assets if the appeal is ultimately unsuccessful. At the same time, in an effort to ensure that the appeal process itself is progressed with as little delay as possible, they have (with GLG) written to the Court of Appeal requesting that the appeal be heard on an expedited basis. LIBA has also written to the Court in support of this request.  If the Court of Appeal agrees to hear the appeal on an expedited basis, it is hoped that the appeal would be heard in October or November. This is, however, subject to the court's availability.

The Joint Administrators will continue to communicate with you through this website regarding the progress of the appeal hearing. Please continue to check the website for information on this and other matters relating to the administration of LBIE.

Please direct any questions you have to clientpositionresponses@lbia-eu.com