Client money & assets update - Client Money Application - procedural hearings held on 15 & 16 and on 27 July 2009

This update concerns the application issued by the Joint Administrators on 1 May 2009 seeking directions from the Court concerning LBIE's obligations in relation to the handling of client money received prior to the time of administration (the "Application").

Two procedural hearings were held on 15 & 16 and on 27 July 2009, at which six representative respondents were appointed by the Court. At the substantive hearing, the representative respondents will put forward arguments relating to the issues which are the subject of the Application on behalf of the class of clients or creditors that they represent.

The details of the representative respondents are set out below. In respect of some classes, more than one representative respondent has been appointed where clients within a particular class may have differing interests.

• The representative respondents for the class of clients of LBIE for whom some client money was segregated at 7.56am on 15 September 2008 ("Segregated Clients") are:
  GLG Global Utilities Fund; and
  Paragon Capital Management Fund Limited.
  
  
• The representative respondents for the class of clients of LBIE for whom money arguably should have been segregated as client money at 7.56am on 15 September 2008 but was not ("Unsegregated Clients") are:
  CRC Credit Fund, Limited;
  Chilton New Era Partners LP; and
  Claren Road Credit Master Fund Ltd.
  
  
  
• The representative respondent for general creditors - i.e. clients and creditors for whom no client money was segregated at 7.56am on 15 September 2008 and for whom LBIE was not required and had not agreed to segregate client money (the "General Estate") - is Hong Leong Bank Bhd.

Further details, including in respect of which issues these representative respondents have been appointed, are set out in the orders which are available here.

The Court has ordered that representative respondents' legal costs will be met from the client money pool and/or the LBIE estate in such proportions as shall be determined by the Court in due course.

In addition to the representative respondents, three of LBIE's affiliated companies (Lehman Brothers Finance AG, Lehman Brothers Holdings Inc and Lehman Brothers Inc) have been appointed as respondents to the Application. They are participating at their own risk as to costs.

A case management conference is scheduled for 24 and 25 September 2009 and the substantive hearing is due to start on 9 November 2009.

Any client or creditor of LBIE who wishes to have a particular argument advanced on their behalf at the substantive hearing should notify the appropriate representative respondent's solicitors, whose contact details are set out below.