Lehman Brothers International (Europe) (in administration)

This site provides information regarding the progress of the LBIE administration and will be updated with new information from time to time as it becomes available.

Gillian Eleanor Bruce, Alison Campbell Grant, David James Kelly and Edward John Macnamara and were appointed as Joint Administrators of Lehman Brothers International (Europe) to manage its affairs, business and property as agents without personal liability. The Joint Administrators manage LBH’s affairs, business and property as agents without personal liability. All the Joint Administrators (the “Administrators”) are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales

Please note that certain postings may contain information that is no longer accurate or applicable as, due to the nature of the Administration, relevant factual and legal circumstances are subject to change. Therefore, certain information on this site may be out of date. The Joint Administrators wish to caution counterparties from relying on any information in this website and they, their staff and advisers accept no liability to any party for any reliance placed upon the information on this website.

Thank you for your understanding as our team continues to work on these complex issues.

Information

Timeline

In 2008, Lehman Brothers International (LBIE) entered administration after its parent company, Lehman Brothers Holdings Inc (LBHI), filed for Chapter 11 bankruptcy in the US.

In 2009, the Administrators of LBIE pursued the objective of achieving a better result for creditors than a liquidation, and sold the equities business to Nomura, preserving over 2,400 jobs.
They also returned or released $12.2 billion of Client Assets and recovered $8.7 billion of cash from House assets.

In 2010, the Administrators filed claims against LBHI and other US debtors, and reached a settlement with Citibank, recovering $2.2 billion of cash and securities.
They also developed a Consensual Approach for the agreement of unsecured claims, and initiated a Small Claims Settlement Offer for claims up to £150,000.

In 2011, the Administrators obtained an extension of the Administration to 30 November 2011, and filed a Proof of Debt against LBI for $8.9 billion.
They also reduced their dependency on third-party IT services, saving over $200 million per annum, and prepared for the UK Supreme Court appeal on pre-Administration Client Money.

In 2012, the Administrators brought forward the unsecured claims filing date to 31 July 2012, and received over 800 new claims in the month before the deadline.
They also concluded binding agreements with LBI and LBF, resulting in significant recoveries and improvements in the indicative financial outcome for creditors.

One of the key points for 2013 was the payment of the first and second unsecured creditor dividends, bringing the cumulative dividend rate to 68.5% by the end of June. The first dividend of 25.2% was paid on 30 November 2012, followed by a 'catch-up' dividend on 28 February 2013, and the second dividend of 43.3% was paid on 28 June 2013.
Another key point for 2013 was the settlement of several major Affiliate claims, resulting in significant recoveries and reductions of unsecured claims for LBIE. The LBI settlement, signed on 21 February 2013, was expected to recover c.$9.1bn for LBIE, while the LBF settlement, agreed on 20 February 2013, reduced its unsecured claim from c.$8.4bn to c.$0.5bn. The LBEF settlement, signed on 15 March 2013, reduced its unsecured claim from £7.65bn to just £0.06bn.

In 2014, the Administrators of LBIE paid a fourth interim dividend to unsecured creditors, bringing their dividend to 100p/£1, and launched the Waterfall I Application to seek directions on statutory interest, contribution rights and other issues relating to the Surplus.
They also resolved several Affiliate issues, including a Hong Kong court ruling on LBHK extended liens and the LBB settlement, resulting in recoveries of over £0.6bn and reduced claim reserves of £0.58bn.

In 2015, the Administrators issued a Surplus Entitlement Proposal to major creditors, seeking a consensual solution to the distribution of the Surplus and Post-Administration Interest, but received limited support.
They also continued to progress the Waterfall I Appeal and the Waterfall II Application, dealing with various issues on the ranking of Subordinated Debt, the existence and calculation of Currency Conversion Claims and Post-Administration Interest, and the release of non-provable liabilities.

In 2016, the Administrators obtained the Waterfall I UK Supreme Court judgement, which confirmed that Subordinated Debt is subordinate to provable claims, Post-Administration Interest and non-provable claims of other creditors, and that Currency Conversion Claims are not admissible.
They also obtained the Waterfall II UK High Court judgments on tranches A and B, which addressed several issues on the application of unsecured dividends, the start date of Post-Administration Interest, and the effect of post-Administration contract releases.

In 2017, the Administrators proposed a Surplus Scheme of Arrangement, which was supported by a Lock-Up Agreement with Wentworth and the Senior Creditor Group, as a mechanism to settle the Waterfall proceedings and distribute the Surplus and Post-Administration Interest.
They also obtained the Waterfall II UK High Court judgement on tranche C, which determined the impact of cost of funding and foreign law issues on Post-Administration Interest claims.

In 2018, the Administrators obtained the sanction of the Surplus Scheme by the UK High Court and the approval of the Scheme Creditors by an overwhelming majority.
They also obtained the Waterfall II UK Appeal Court judgement on tranches A and B, which upheld most of the first instance decisions, except for reversing the finding that Post-Administration Interest accrues from the date of Administration.

In 2019, the Administrators made further surplus distributions of full statutory interest entitlements to creditors and subordinated creditors, totalling over £2.2 billion.
The Administrators also continued to pursue litigation and asset recovery, including the withholding tax proceedings in the UK Supreme Court and the German tax investigation.

In 2020, the Administrators received a favourable ruling from the UK Supreme Court on the withholding tax issue, confirming that statutory interest payable under the Insolvency Rules constitutes "yearly interest" subject to UK withholding tax.
The Administrators also consented to the directors' request to make the first preferred equity dividend distribution of £29 million to the Shareholder, LB Holdings Intermediate 2 Limited.

In 2021, the Administrators made two more preferred equity dividend distributions of £100 million and £115 million to the Shareholder.
The Administrators also obtained a favourable judgement from the UK High Court on the Firth Rixson application, which concerned the recovery of amounts owed by counterparties who invoked section 2(a)(iii) of the ISDA Master Agreement to suspend their payment obligations.

In 2022, the Administrators entered into a compromise arrangement with the creditors of MCF, an affiliate entity subject to insolvency proceedings in the UK, and became the beneficiary of a trust over MCF's shares in its solvent subsidiaries, SPML and PML.
The Administrators also received an adverse decision from the US Supreme Court in the AGFP litigation, which involved a claim by a counterparty for early termination payments under certain derivative contracts, and indicated their intention to appeal.

In 2023, the Administrators finalised the consensual resolution with the German Public Prosecutor and the German Federal Tax Authority, and paid the agreed amount of £40 million to settle the German tax investigation.
The Administrators also applied to the UK High Court to extend the Administration for a further 3 years to 30 November 2025, to allow time to resolve outstanding matters.

Contacts

All queries to the Administrators of LBIE should be sent to:

General queries: generalqueries@lbia-eu.com
HR queries: uk.hrqueries@lbia-eu.com

_{Alison Campbell Grant, David James Kelly, Edward John Macnamara and Gillian Eleanor Bruce were appointed as Joint Administrators of Lehman Brothers International (Europe) to manage its affairs, business and property as agents without personal liability. Alison Campbell Grant, David James Kelly, Edward John Macnamara and Gillian Eleanor Bruce are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales. The Joint Administrators are bound by the Insolvency Code of Ethics which can be found at: https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics}

_{The Joint Administrators may act as controllers of personal data, as defined by the UK data protection law, depending upon the specific processing activities undertaken. PricewaterhouseCoopers LLP may act as a processor on the instructions of the Joint Administrators. Personal data will be kept secure and processed only for matters relating to the Joint Administrators' appointment. Further details are available in the privacy statement on the PwC.co.uk website or by contacting the Joint Administrators.}

_{Lehman Brothers International (Europe) is registered in England and Wales with registered no. 02538254.}

_{VAT registration no. 446 9315 28}