Client Money Update - Update on Client Money held at Lehman Brothers Bankhaus AG - 18/05/2012

This update concerns the claim made by the Joint Administrators on behalf of LBIE clients for the return of US$1 billion of client monies placed with Lehman Brothers Bankhaus AG ("Bankhaus") prior to the date of administration.

On 22 December 2009, the Joint Administrators filed a petition at the Frankfurt Main Regional Court in Germany, claiming the return of US$1 billion plus interest to LBIE by Bankhaus. This claim was dismissed by the Frankfurt Court on 7 October 2010. The written judgment received on 11 October 2010 denied the existence of a trust relationship between LBIE and Bankhaus and failed to make a judgment on the substance of LBIE's pari passu creditor claim for the client monies, prompting LBIE to appeal.

In a judgement dated 8 June 2011, the Appeal Court referred LBIE’s claim back to the Court of First Instance, as stated in our update on 23 June 2011. Following additional written submissions by both parties and GLG (a client money claimant acting as Intervener), a hearing took place at the Regional Court in Frankfurt on 1 March 2012. On 3 May 2012 the Regional Court handed down its judgement, ruling that LBIE has been successful in establishing its pari passu claim against Bankhaus.

The Regional Court has ruled that LBIE’s client money claim of €802,160,000 (US$1 billion as at 13 November 2008, the applicable exchange rate for LBIE's claim) and contractual interest for the period from 12 September 2008 till 15 September 2008 of €156,923 are to be included in the insolvency claims of Bankhaus as an ordinary creditor. This means that LBIE's claim for client monies placed with Bankhaus will rank pari passu with other unsecured creditors of Bankhaus.

Subject to any appeal and the ultimate dividend rate announced by Bankhaus, this ruling will result in a significant increase in the funds recovered by LBIE into its client money pool, resulting in a higher payout for LBIE's client money claimants.

The Joint Administrators view this result as a major success for the Administration and client money claimants and a significant milestone in the process of recovering client money for LBIE's clients.

Should you have any questions regarding this update, please contact the Communications and Counterparty Management team at clientpositionresponses@lbia-eu.com.