Creditor Update – second interim distribution to unsecured creditors – 08/05/2013

Further to the announcement at the Administrators’ update webinar on 30 April 2013, the Administrators wish to provide creditors with further information on the anticipated timing of the second interim distribution to unsecured creditors and a first and final distribution to preferential creditors.

In summary, we explain in this update that:

1. it is currently anticipated that the second interim dividend (and first preferential dividend) will be paid on or around 28 June 2013; and
2. the last date for agreement of claims for inclusion in the second interim distribution (or first preferential distribution) will be 31 May 2013.

Second interim distribution to unsecured creditors

In the Administrators’ ninth progress report dated 12 April 2013, we highlighted our intention to pay a second interim dividend in the reasonably near future. This remains the case, with preparations underway to enable a second interim distribution by early summer 2013. Unsecured creditors should be aware, however, that, to allow sufficient time for inclusion in this dividend payment, creditors will need to have their claims agreed and admitted before the end of May 2013, if they have not already done so.

The rate of the second interim dividend will be determined immediately prior to its declaration, taking into account any further receipts and reduced reserves following settlements achieved with Affiliate and Street counterparties, as well as further rejections of claims to that date.

Pursuant to Rule 2.95 of the Insolvency Rules 1986, all creditors known to the Administrators were sent by post on 1 May 2013 a notice of intention to declare a dividend. This highlighted that:

• the last date for proving of debts will be 31 May 2013; and
• a second interim dividend will be payable no later than 31 July 2013, albeit the current intention is to make payment on or around 28 June 2013.

A copy of that notice can be accessed here.

Pursuant to Rule 2.98 of the Insolvency Rules 1986, all creditors that have submitted a Proof of Debt (excluding rejected claims) will receive a written notification from the Administrators either prior to or at the time of the second interim dividend setting out further information, including: (i) the dividend rate; (ii) the total amount of the dividend being distributed; and (iii) the level of reserves for unsettled claims.

First and final distribution to preferential creditors

LBIE has a relatively small number of preferential claims relating to former overseas branch employees.

As part of the statutory notices highlighted above, a first and final dividend at a rate of 100% will also be announced to admitted preferential creditors. Preferential claims admitted by 31 May 2013, but which have yet to be paid, will be paid a dividend on or around 28 June 2013.

Application to the High Court to assist with future distributions

The Administrators made an application to the High Court on 26 April 2013 following which the High Court granted permission pursuant to:

• Paragraph 65(3) of Schedule B1 of the Insolvency Act 1986 to make such further distributions to unsecured creditors as they consider appropriate;
• Rule 2.97(2) of the Insolvency Rules to declare a dividend in respect of the second interim distribution to unsecured creditors on the basis that the Administrators will provide in full for certain known claims subject to/purported to be subject to an application to the High Court to reverse or vary a decision of the Administrators to reject a Proof of Debt; and
• Rule 2.97(2) of the Insolvency Rules to declare dividends in respect of any future interim distribution, notwithstanding that there may be pending applications to the High Court to reverse or vary a decision of the Administrators to reject a Proof of Debt on the basis that full provision will be made for any such disputed Proofs of Debt.

A copy of the High Court Order can be found here.

Other matters

Creditors should note that:

• to be eligible to receive the second interim dividend, at the start of June 2013, every unsecured creditor with an admitted claim must confirm its GBP Standard Settlement Instructions (“SSIs”) and that it still owns the claim via LBIE’s Client Information Portal; and
• any unsecured creditor who has yet to submit a Proof of Debt via the LBIE Client Information Portal is encouraged to do so as soon as practicably possible.

For all queries relating to the content of this update, please contact your existing LBIE contact or the Communications and Counterparty Management team at unsecuredcreditors@lbia-eu.com.