The Joint Administrators are pleased to set out below an update in respect of the further progress made with interested parties concerning the commercial terms upon which the Waterfall III proceedings might be settled.
This proposal is entirely separate and is not conditional on the other announcement of today’s date concerning the outline terms for an interim interest distribution.
The Joint Administrators would like to receive creditor feedback concerning these outline terms. In summary, if these terms are finalised and appropriate directions are handed down by the High Court, LBIE will have achieved a resolution of its relationship with its shareholders on terms that will provide a reserve fund (based on maximum projected recoveries from its shareholders of £913m) that would be available in the event of a shortfall in respect of the claims against LBIE’s surplus for statutory interest and non-provable liabilities.
A general update on progress in the Administration will be made in our creditors’ webinar scheduled for 27 April 2017 and in our Seventeenth Progress Report (for the period 15 September 2016 to 14 March 2017) which will be published in April. If appropriate, we will make reference to creditors’ feedback (if any) during the webinar.
Settlement of the Waterfall III proceedings
In their Sixteenth Progress Report dated 7 October 2016, the Joint Administrators noted various discussions had taken place with LB Holdings Intermediate 2 Limited (in administration) (“LBHI2”) and Lehman Brothers Holdings Inc. (“LBHI”) to consider the basis upon which the Waterfall III proceedings might be settled. The scope of the settlement arrangements envisaged has now widened to include certain other UK estates.
The key outline terms of the proposed arrangements are as follows:
Contribution Reserve
Final shortfall £’m |
Projected recovery* £’m |
0-500 |
0-500 |
700 |
645 |
900 |
771 |
1,100 |
838 |
1,300 |
880 |
1,500 |
913 |
1,500+ |
913 |
*This table represents a summary |
Avoiding a liquidation of LBIE
Supreme Court decision on Waterfall I
Waterfall III proceedings
Claims between LBIE and its unlimited liability shareholders
Inter affiliate arrangements
Omnibus application
Notwithstanding the continuation of the other Waterfall proceedings and the attendant appeals later this year and beyond, there would be considerable benefit to LBIE’s creditors in LBIE entering into the proposed arrangements. In particular:
The Joint Administrators will update creditors on these discussions in the coming weeks, and more particularly once the judgment has been handed down by the Supreme Court in the Waterfall I proceedings and has been fully considered by the Joint Administrators.
Should you have any queries regarding this update, please contact LBIE’s Communications and Counterparty Management team at generalqueries@lbia-eu.com.
LBIE and its Joint Administrators, and their respective officers, employees and agents disclaim any liability which may arise from this communication, or any other written or oral information provided in connection herewith, and any errors and/or omissions herein or therein.
Restructuring and Insolvency Partner, UK Head of Insolvency, PwC United Kingdom
Tel: +44 (0)7974 332659