Extended Lien Application – 22/05/2013

In the judgment of the High Court handed down on 2 November 2012, Mr Justice Briggs found that LBIE owes no obligations to its affiliates arising from the extended lien provisions that were considered by him and that LBIE’s affiliates have no rights directly to enforce such provisions against LBIE. For further details, please refer to the Joint Administrators’ previous update on the Extended Lien Application.

On 23 November 2012, 314 Commonwealth Avenue Inc. lodged an application for permission to appeal the judgment of Mr Justice Briggs. The Court of Appeal granted permission to appeal. Other parties, including LBIE, subsequently lodged applications for permission to appeal. The Joint Administrators are pleased to announce that on 17 May 2013, the appeals were dismissed by order of the Court pursuant to a consent application by all parties.

The judgment of Mr Justice Briggs is accordingly final and not subject to any further appeal.

Consequently, the Joint Administrators have considered LBIE’s position in relation to the exercise of security interests in respect of unsecured distributions and, where applicable, other assets to which LBIE's counterparties may be entitled, in circumstances where the Joint Administrators have been notified by one or more of LBIE’s affiliates that they require LBIE to withhold distributions or assets against the settlement of debts owed to them by that counterparty.

The Joint Administrators will now proceed with making such distributions (including previously withheld distributions) and with releasing assets to such counterparties as soon as is practicable, unless there are other reasons why these steps should not take place. For example, there may be circumstances where the principles set out in the judgment of Mr Justice Briggs may not apply (for example, where there is an applicable security interest in a prime brokerage agreement or other agreement not considered by the judge). Prior to release or distribution the Joint Administrators will also require that any outstanding issues between LBIE and the counterparty have been resolved.

The Joint Administrators will be writing to those entities affected by the dismissal of the appeals.