Client money update - Court application 1 May 2009

On 1^st May 2009 the Joint Administrators made an application to the High Court seeking directions on the client money held by Lehman Brothers International (Europe) (in administration) ("LBIE"). 

The application has been made following the Joint Administrators' consideration of the 24^th March High Court judgment in the Global Trader case.

As noted in the Client Money and Assets FAQ's of 27^th March, the Global Trader judgment is relevant to issues that have arisen in relation to the treatment of client money in the administration.

However, the LBIE client money position is significantly more complicated than that of Global Trader and it is therefore necessary for the Joint Administrators to consider factors that were not present in Global Trader. The purpose of the Joint Administrators application is to initiate the process to address the issues relevant to LBIE to expedite the return of client money.

The full text of the High Court application is available here.

Over the coming weeks, the Joint Administrators intend to supplement the evidence presented to the High Court in order to explain in detail the factual background against which the issues raised in the application need to be determined.

The Joint Administrators believe the active engagement of clients in relation to the issues raised in the application is important to this process.  Therefore, clients are encouraged to review the application, and any supplemental evidence as it becomes available, and to consider making representations to the court or to the Joint Administrators in relation to those issues that may impact them. The answers to some of the questions may affect the money available for distribution to the general estate. Therefore the application may be of interest to creditors in general.

What questions have the Joint Administrators asked the court in the application?

The application asks the Court to address many questions relating to a wide range of complex issues.  You are encouraged to read the full text of the application (the full text of the application is available here). However, broadly, the application addresses two key issues:

1. What monies constitute the client money pool?
The questions relating to constitution are to determine, among other things, which accounts are included in the client money pool, in what circumstances and to what extent should money be added to or removed from the pool by the LBIE estate.

2. How are client entitlements to the pool determined?
The questions relating to entitlement are to determine, among other things, which clients have an entitlement to the client money pool, the method for calculating the amount of any entitlement, the time when entitlement should be determined, the treatment of money segregated by LBIE for shortfalls in client stock depots and the treatment of post administration events.

How can I make representations to the Joint Administrators regarding the application?

If you would like to make any representations to the Joint Administrators regarding the application please send your communication to the Administration Trust Property team:

clientpositionresponses@lbia-eu.com

Please ensure that the subject matter in your email reads: Client Money Court Application

When will the High Court rule on the application?

The Joint Administrators will announce the dates of any hearings that are listed in connection with the application as and when such dates become available.