First Interim Dividend

1. What is the First Interim Dividend?

Answer: The First Interim Dividend is the first unsecured dividend payment which will be made by the Joint Administrators.

2. What is the bar date by which an unsecured creditor’s proof of debt must be submitted?

Answer: On 2 May 2012, the UK High Court granted the Joint Administrators’ request to bring forward the last date for proving to 31 July 2012 (the “Bar Date”).

3. When will the First Interim Dividend be paid?

Answer: On 2 May 2012, the UK High Court granted the Joint Administrators’ requests to (i) extend the period during which payment of the First Interim Dividend must be paid from two months from the Bar Date to within five months of the Bar Date, and (ii) extend the period during which the Joint Administrators are required to admit, reject or make provision for proofs of debt submitted by unsecured creditors from a period of 7 days from the Bar Date, to three months from the Bar Date. Accordingly, it is the Joint Administrators’ intention to pay the First Interim Dividend by the end of 2012.

Further dividends will be paid during the period of the administration.

4. What is the rate of the First Interim Dividend?

Answer: The rate of the First Interim Dividend has not yet been determined. Once the Joint Administrators are in receipt of all valid proofs of debt (each, a “PoD”) and have assessed the most appropriate level of reserves which should be made, the amount of the First Interim Dividend can be determined.

The amount of the First Interim Dividend will be impacted by a number of factors including:

• any and all further recoveries made by the Administration’s House Estate;
• the outcome of the most significant inbound Affiliate claims which remain pending;
• the proportion of unsecured creditors filing valid proofs of debt prior to the Bar Date, and consequently, the Joint Administrators’ ability to review and ascertain the validity of such proofs of debt ahead of declaring the dividend; and
• the number of unsecured creditors who have executed a claims determination deed (“CDD”) (or similar agreement).

Please refer to the Joint Administrators’ seventh progress report dated 12 April 2012, for the current indicative financial outcome of the Administration. This sets out the Administration’s current indicative range of outcomes and should be read in conjunction with the various notes and caveats in the report.

5. How do I get my claim admitted?

Answer: The first step towards getting a claim admitted is to submit a valid PoD on the LBIE Client Information Portal (“CIP”). Unsecured creditors wishing to participate in the First Interim Dividend process should submit a valid PoD as soon as possible and no later than the Bar Date.

Once a PoD has been submitted, it will be assessed by the Joint Administrators. Valid unsecured creditor claims will be determined and admitted via a claims determination deed.

Please note that submission of a valid PoD by the Bar Date does not guarantee that the claim will be capable of agreement prior to the First Interim Dividend, so creditors are encouraged to submit their PoDs without delay.

6. What is the process for participating in the First Interim Dividend?

Answer: To be considered eligible to participate in the First Interim Dividend, to the extent they have not already done so, creditors must:

a) submit a PoD via the CIP by the Bar Date;

b) have their claim assessed by LBIE;

c) execute a claims determination deed (“CDD”) (or similar agreement) issued by LBIE and any ancillary documentation, as determined by the Joint Administrators; and

d) provide their standard settlement instructions (“SSIs”) for a GBP bank account.

7. What happens if I do not submit my PoD by the Bar Date?

Answer: Unsecured creditors who do not submit their PoD by the Bar Date will not be eligible to participate in the First Interim Dividend.

PoDs which are received after 31 July 2012 will be assessed in the normal course of the Administration.

The Joint Administrators intend to pay a “catch up dividend” payment (prior to any further interim distribution) to unsecured creditors whose claims are admitted after the First Interim Dividend. Any such payment will be at the same dividend rate as the First Interim Dividend, and will be contingent on there being sufficient funds remaining in the Administration.

8. What happens if I submit my PoD by the Bar Date and it is not agreed by the Joint Administrators by 31 October, 2012?

Answer: The Joint Administrators are required to admit, reject or make provision for PoDs by 31 October, 2012. Accordingly, if you have submitted your claim by the Bar Date but it is not admitted or rejected by 31 October, 2012, the Joint Administrators will reserve an appropriate amount of your claim until such time as your claim is determined.

9. I have a Client Money and/or Trust Asset element to my claim; how does this affect my participation in the First Interim Dividend?

Answer: Creditors who have a proprietary claim (e.g. a client money or trust asset claim) and believe that this may give rise to a contingent unsecured claim should submit a PoD by the Bar Date for their contingent unsecured claim.

10. What is the difference between payment under the First Interim Dividend and the Small Claims Settlement Offer?

Answer: Under both options, PoDs must be submitted by 31 July 2012 and payment will be made within five months of that date.

All creditors who either (a) have claims of up to £150,000 or (b) agree to cap their claim at £150,000 will be entitled to settle their claim and receive a single payment equal to 90% of their claim under the Small Claims Settlement Offer.  Thus, the maximum payment to an eligible creditor under the Small Claims Settlement Offer will be £135,000.

Eligible unsecured creditors who choose not to participate in the Small Claims Settlement Offer will participate in the First Interim Dividend process as well as any subsequent dividends made by the Administration. The rate of the First Interim Dividend has not yet been determined.