Client Money Update - Client Money Bar Date Order – 2 November 2018

On 20th September 2018 the Joint Administrators applied to the High Court seeking a bar date by which all client money claimants must make their claims and with a view to paying a final client money distribution and closing the client money estate.

The application was heard on 30th October 2018. The Court granted the order which the Joint Administrators requested (as issued, the “Order”) which means that the Joint Administrators are entitled to impose a bar date.  The Order was made the same day and may be viewed here. The Order is in similar terms to the draft order which we included in our update of 15th October 2018 announcement.

The Order reflects the terms of a direction to LBIE by the FCA on 25 October 2018, which may be viewed here. The FCA’s direction amends the terms of the rules governing client money held by LBIE and will allow LBIE to make a final distribution of client money without making payments to clients who have not confirmed their payment details to LBIE since 1 July 2018 and do not do so by the bar date. Those payments will (if at least US$25) be made to the Insolvency Service as explained in more detail below.

By the terms of the Order, any client wishing to assert an entitlement to client money must lodge a Client Money Claim Form, unless they are an “Existing Claimant”.  A client is an “Existing Claimant” if they receive an “Existing Claimant Certificate” from LBIE after 29th October 2018. In the next few days we will be sending out “Existing Claimant Certificates” (in the form of emails or letters) to all clients who we believe have client money entitlements.

Action required

1) Claim Form

One week after we have sent out the Existing Claimant Certificates we intend to give notice of a client money bar date (the “Bar Date”) under the terms of the Order and the FCA direction. The Bar Date will be about four weeks after the notice of the Bar Date (the specific date will be set out in the notice).

If you receive an Existing Claimant Certificate you do not need to submit a Client Money Claim Form in order to claim for client money up to the value of your “Existing Claimant Amount” (which will be stated in your Existing Claimant Certificate).

You will need to submit a Client Money Claim Form (which we will provide a link to when we give notice of the Bar Date) if:

• you do not receive an Existing Claimant Certificate but you believe that you have a client money entitlement, or
• you do receive an Existing Claimant Certificate, but you believe that you are entitled to more than the Existing Claimant Amount which is stated in your Existing Claimant Certificate.

2) Payment Details

Whether or not you need to submit a Client Money Claim Form, all client money claimants must ensure that, before the Bar Date, regardless of whether they have previously received distributions of client money, they confirm their payment details if they have not done so since 1 July 2018.

 “Payment details” means your electronic settlement instructions or current address to which LBIE can send a cheque. We intend to make distributions of client money in US dollars, therefore your settlement instructions should be for a US dollar account if you have one. Please contact LBIE at clientpositionresponses@lbia-eu.com for information about how to confirm your payment details.

Consequences of the Bar Date

If you do not receive an Existing Claimant Certificate and you do not submit a Client Money Claim Form by the Bar Date, then LBIE and the Joint Administrators will be entitled to make a final distribution of client money without regard to any claim you might have to client money. If you receive an Existing Claimant Certificate and you believe that you are entitled to more than your Existing Claimant Amount and you do not submit a Client Money Claim Form by the Bar Date, then LBIE and the Joint Administrators will be entitled to in make a final distribution of client money without regard to any claim you might have in excess of your Existing Claimant Amount.

If you receive an Existing Claimant Certificate, have not confirmed your payment details to us since 1 July 2018 and do not do so by the Bar Date, and the value of your remaining client money distribution is at least US$25, then LBIE intends to pay the value of your remaining client money distribution into the Insolvency Service’s Unclaimed Dividends Account and upon payment into that account you will no longer have a client money claim against LBIE. If the value remaining is less than US$25 then you will no longer have a client money claim against LBIE after the Bar Date (and the money will not be paid to the Unclaimed Dividends Account). If the value of your remaining client money distribution is paid into the Insolvency Service’s Unclaimed Dividends Account you will be able to claim it from the Insolvency Service, even after LBIE’s final distribution of client money. Details for contacting the Insolvency Service to claim amounts paid to the Unclaimed Dividends Account will be set out in the Bar Date notice.

Queries

If you have any questions about this update please contact the Communications and Counterparty Management Team by emailing clientpositionresponses@lbia-eu.com.