Client Money & Assets Update - Scheme of Arrangement - Jurisdiction Application - 15/07/2009 updated 21/07/2009

On 14 July 2009 the Joint Administrators made an application the High Court concerning the jurisdiction of the court to sanction a scheme of arrangement (the "Application") with respect to certain client assets held by Lehman Brothers International Europe ("LBIE"). The Application Notice can be accessed here.

The following documents were filed as part of the Application and can be accessed by clicking on their links below:

• Part 8 Claim form seeking the relevant relief here.
• A copy of the witness statement here.
• Key terms of the scheme which the Joint Administrators are proposing to promote here.

In addition a short summary of the proposed scheme can be accessed by clicking here .

As previously explained to creditors and the Court, the current mechanism in place to return client assets by individual bilateral negotiation is a lengthy process, is onerous on clients and is failing to bring finality to dealings between them and LBIE.   These issues have previously been explained in the second witness statement made by Steven Pearson, on 25 February 2009 in which the Joint Administrators explained their intention to propose a scheme of arrangement in respect of Trust Property. Click here to review such statement.

A further witness statement was filed in relation to such application on 13 March 2009 and can be found here.

Subsequently, on 16 March 2009 the Court granted an order that the Joint Administrators be at liberty to propose a scheme of arrangement between LBIE and persons who are creditors of it in respect of Trust Property.  A full copy of the sealed order can be accessed by clicking here.

The London Investment Banking Association ("LIBA") appeared at the hearing of the 25 February application, which took place on 16 March 2009. LIBA did not oppose the Joint Administrators' application made at that hearing, but did note that it considered there to be a fundamental question as to whether the court has jurisdiction to subject Trust Property to a scheme of arrangement.  The Application  seeks clarity on that issue.  The Joint Administrators welcome this opportunity to explain how the scheme of arrangement will expedite the distribution of assets moving forward.

The Application will be heard in public on 29 and 30 July 2009 at the Royal Courts of Justice in London. Since the hearing on 16 March 2009, the Joint Administrators have been in correspondence with LIBA in relation to the jurisdiction question and the Application. As at the date of this posting (15 July 2009), it was unclear whether LIBA intended to appear at the hearing in respect of the Application and the Joint Administrators were awaiting confirmation of LIBA's position. As at 21 July 2009, LIBA has now indicated that it will be appearing. Anyone else wishing to appear at the hearing should please contact the Joint Administrators using the contact details set out below.

For the avoidance of doubt the Joint Administrators do not seek in the Application the approval of the terms of the proposed scheme of arrangement, only a determination on the jurisdiction issue explained above.  If the Court grants the Order sought then the Joint Administrators will in due course make an application to the Court for meetings of creditors to be convened.  At those meetings the creditors will have the opportunity to vote for or against the scheme of arrangement. 

At this point you do not need to take any action as regards the content of this communication.  The Joint Administrators have prepared a list of Frequently Asked Questions regarding this Application and the proposed scheme.  To review, please click here.

The Joint Administrators will continue to communicate with you through the PwC Lehman Brothers International (Europe) (in administration) website regarding the progress of the Application and the proposed Scheme and further postings are expected to be made over the course of the summer. Please continue to check the website for information on the scheme of arrangement and other matters relating to the administration of LBIE. 

Please direct any questions you have about the Application hearing to generalqueries@lbia-eu.com