Industry Updates

90% of Lehman's clients endorse plan to return $11bn in frozen assets by March next year

Wednesday, December 30, 2009

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Opalesque Industry Updates - Lehman Brothers International's administrator PricewaterhouseCoopers (PwC) announced on Tuesday that almost all of the clients, whose assets have been frozen following the firm's collapse are supporting a plan to return the money early next year.

According to the Financial Times, the administrators said that a Claim Resolution Agreement (CRA) has been put into effect following the agreement of over 90% of the clients (by value) have supported the plan by the Dec 29 deadline.

The so-called CRA is a contract LBIE and its clients setting out the mechanisms for returning the assets. It divides clients' claims into four categories and facilitates the valuation and settlement of disputes over claims.

Joint Administrator Steven Pearson was quoted in Banking Business Review, saying “I am delighted that we have received overwhelming support for this arrangement to return assets to clients. The CRA now provides an agreed basis on which to systematically settle clients’ claims and reunite them with their assets. The implementation of the CRA illustrates the flexibility afforded to myself and my fellow LBIE Administrators under UK insolvency law and, in particular, the ability to develop practical solutions in consultation with the market."

According to press reports, hundreds of hedge funds, including prominent funds like Ramius Capital, could not access their money following Lehman's bankruptcy filing last September. The plan would return assets to funds and close out positions without the need to post further collateral.

- FG

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