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100% payout possible to Lehman creditors 15 April 2013

Lehman Brothers Europe administrator Tony Lomas has confirmed that creditors of the firm may yet see a full return of their money.

In a statement likely to offer much cheer to creditors of the failed banking giant, the PwC partner said that, in the best case scenario, a full return of sums owed would now be possible.

In the latest six-month update, Lomas updated the estimate of the likely range of financial outcomes.

In the report, the administrators summarise how the past six months have seen significant progress in the administration.

Successes include the settling of major disputes involving billions of pounds of claims with other Lehman affiliates in the USA, Switzerland and Luxembourg, ending lengthy legal actions. These settlements have resulted in higher expected future recoveries and a reduction in the reserve for claims.

Tony Lomas, lead administrator and partner at PwC said: “To be able to advise ordinary unsecured creditors that we now have a reasonable chance of eventually repaying their claims in full, marks a significant milestone for the administrators.

“This would not have been possible without a huge combined PwC and Lehman effort over the past four and a half years.

“There is still a lot to do before finalising the wind-down but we do expect to pay a second, significant dividend to creditors in the near future, taking us another step towards this new target.”

Lomas said that, since the start of the wind-down, £13.6bn of client assets have been returned to former clients of LBIE and one of the recent settlements reached by the Administrators promises to free up another $9.1bn of assets which the Administrators hope to return to clients later this year.

He explained: “In November of last year a first interim dividend of 25.2% was paid to unsecured creditors. As well as now making plans for a second unsecured dividend, the administrators plan to make a first distribution to LBIE’s client money claimants some time later this month.

“The LBIE administration continues to be an extraordinarily large and complex challenge with many very high value disputes still to be resolved with counterparties.

“The value difference to LBIE’s creditors between success and failure in the administrators settling these disputes is potentially very significant indeed. As a result the task still consumes the time of a large number of continuing Lehman employees and PwC specialists.”

 

 

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