Small Claims Settlement Offer

• What is the Small Claims Settlement Offer?
• Is 90% the Joint Administrators’ view of the aggregate dividend payable to creditors over the life of the Administration?
• Why is the Small Claims Settlement Offer being made?
• Who is eligible to be considered for a payment under the Small Claims Settlement Offer?
• What is the process for participating in the Small Claims Settlement Offer?
• I have a Client Asset claim, how does this affect my participation in the Small Claims Settlement Offer?
• I have a Client Money element to my claim, how does this affect my participation in the Small Claims Settlement Offer?
• I have an agreed claim amount in excess of the £150,000 threshold; is it possible for my claim to be included as part of the Small Claims Settlement process?
• Can I partially assign or split my claim in order to increase my eligibility for the Small Claims Settlement Offer?
• I have an admitted unsecured claim which is below the £150,000 threshold of the Small Claims Settlement Offer. What happens if I don’t participate in the Small Claims Settlement Offer?
• How do I participate in the Small Claims Settlement Offer?
• If I miss the 31 January 2013 deadline for the “Catch up” Dividend and the Small Claims Settlement Offer, will I be eligible for any future small claims settlement offer?
• I have a guarantee from Lehman Brothers Holdings Inc (“LBHI”); how will my claim into LBHI be affected if I choose to participate in the Small Claims Settlement Offer?

1. What is the Small Claims Settlement Offer?

Answer: The Joint Administrators are offering to make a full and final settlement to all creditors whose claims do not exceed £150,000 via a single payment of 90% of their agreed claim amount. Any creditor whose agreed claim amount exceeds £150,000 may also participate, but the maximum payment made will be 90% of £150,000 (i.e. a payment of £135,000).

The Joint Administrators previously made a similar offer to all creditors which lapsed on 2 November 2012. Given the success of the previous offer, the Joint Administrators are now reissuing the Small Claims Settlement Offer. The deadline for participation is 31 January 2013 and the Joint Administrators intend to make payment under the Small Claims Settlement Offer on or before 28 February 2013.

2. Is 90% the Joint Administrators’ view of the aggregate dividend payable to creditors over the life of the Administration?

Answer: No. The payment percentage in respect of the Small Claims Settlement Offer is not intended to reflect the Joint Administrators’ view of the aggregate dividend for creditors who choose not to participate in the Small Claims Settlement Offer. The final aggregate dividend to unsecured creditors could be either higher or lower than the 90% being offered under the Small Claims Settlement Offer.

3. Why is the Small Claims Settlement Offer being made?

Answer: The Joint Administrators are making the Small Claims Settlement Offer because it will bring considerable benefits to creditors generally by providing the most efficient solution for settling the claims of creditors. This offer is expected to be advantageous particularly to creditors with small claim amounts and, assuming it is taken up by the majority of these, it will remove the need for the Administrators to deal further with many hundreds of counterparties, thereby saving the LBIE estate the costs and resources that this would otherwise consume.

In particular, by accepting the Small Claims Settlement Offer, creditors could potentially benefit from the following:

• rapid resolution of their agreed and admitted claim against LBIE; and
• certainty of their recovery and finality to their relationship with LBIE, thereby also reducing the administrative burden on LBIE in dealing with such creditor claims throughout a conventional dividend process over the life of the Administration.

4. Who is eligible to be considered for a payment under the Small Claims Settlement Offer?

Answer: This offer is available to all creditors, including those with contingent Client Money claims and/or Client Asset claims, as well as LBIE’s Affiliates, who comply with the eligibility requirements set out in Question 5 below.

5. What is the process for participating in the Small Claims Settlement Offer?

Answer:  To the extent they have not already done so, creditors must:

a) submit a PoD via the LBIE Client Information Portal;

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, including a further agreement with LBIE, accepting the Small Claims Settlement Offer as full and final settlement of all claims under the relevant agreement and where relevant, an agreement assigning any Client Money claim; and

d) provide their Standard Settlement Instructions (“SSIs”) for a GBP bank account.

Each of the above requirements must be completed by no later than 31 January 2013 in order to be considered eligible for the Small Claims Settlement Offer.

6. I have a Client Asset claim, how does this affect my participation in the Small Claims Settlement Offer?

Answer: Client Asset claimants who have executed a CDD (or similar agreement) can participate in the Small Claims Settlement Offer with respect to the unsecured claim represented by such CDD (or similar agreement) without affecting their Client Asset claim.

7. I have a Client Money element to my claim, how does this affect my participation in the Small Claims Settlement Offer?

Answer: Client Money claimants are entitled to participate in the Small Claims Settlement Offer and should refer to Question 5 within these FAQs for further information on the process for participation. Please note that Client Money claimants wishing to take part in the Small Claims Settlement Offer will be required to relinquish their Client Money claim by waiving it or assigning it to a nominee of LBIE.

8. I have an agreed claim amount in excess of the £150,000 threshold; is it possible for my claim to be included as part of the Small Claims Settlement process?

Answer: Any creditor whose agreed claim amount exceeds £150,000 may also participate, but the maximum payment made will be 90% of £150,000 (i.e. a payment of £135,000). In doing so, the claimant agrees to waive any admitted claim amount in excess of £150,000 and will not receive a dividend in respect of any such excess.

9. Can I partially assign or split my claim in order to increase my eligibility for the Small Claims Settlement Offer?

Answer: No. Splitting of claims and/or partial assignments will not be allowed as a way of increasing eligibility for this Small Claims Settlement Offer. The eligibility of claims that have been partially assigned or split prior to 4 May 2012 (the date the Small Claims Settlement Offer was announced) to participate in the Small Claims Settlement Offer will be considered by the Joint Administrators on a case by case basis.

10. I have an admitted unsecured claim which is below the £150,000 threshold of the Small Claims Settlement Offer. What happens if I don’t participate in the Small Claims Settlement Offer?

Answer: Eligible creditors with an admitted claim below £150,000 who do not participate in the Small Claims Settlement Offer will receive dividends in the normal course of the Administration, including the “Catch up” Dividend if applicable.

11. How do I participate in the Small Claims Settlement Offer?

Answer: Creditors who wish to participate in the Small Claims Settlement Offer should log onto the Client Information Portal and register their interest.

Please note that registration does not automatically guarantee a creditor’s participation in the Small Claims Settlement Offer.

12. If I miss the 31 January 2013 deadline for the  “Catch up” Dividend and the Small Claims Settlement Offer, will I be eligible for any future small claims settlement offer?

Answer:  There are no plans to extend the deadline or repeat the Small Claims Settlement Offer.

13. I have a guarantee from Lehman Brothers Holdings Inc (“LBHI”); how will my claim into LBHI be affected if I choose to participate in the Small Claims Settlement Offer?

Answer: Please contact LBHI directly. LBHI is aware of the Joint Administrators’ Small Claims Settlement Offer.