Lehman Brothers Financial SA (LEHNQ)

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"Hong Kong July 13 2016 Did you know that a scheme of arrangement can be used to reduce the creditor constituency in a liquidation, so that time and costs can be saved for the benefit of all parties?

The Honourable Mr. Justice Ng of the Hong Kong High Court made an Order sanctioning a scheme of arrangement (Scheme) proposed by the Joint and Several Liquidators (Liquidators) of Lehman Brothers Asia Holdings Limited (LBAH) to be implemented between LBAH and certain of its unsecured creditors (Scheme Creditors).

LBAH is one of the Hong Kong-incorporated subsidiaries in the Lehman Brothers group, of which the ultimate holding company is Lehman Brothers Holdings Inc (LBHI). LBHI and certain affiliates controlled by it (together, LBHI and Affiliates) collectively hold most of the unsecured claims admitted in the LBAH liquidation. Of the balance of the admitted claims (Scheme Claims), a large part is held by other members of the Lehman Brothers group, and the rest by third parties. These latter two categories are the Scheme Creditors.

The liquidation has reached an advanced stage. It is considered that all assets of LBAH have been identified and their expected value assessed, based on reasonable assumptions. Certain distributions and payments from LBAH’s debtors remain outstanding and may take a further two years to be collected.

The Scheme was proposed with the objective of reducing LBAH’s creditor constituency and thereby simplifying its liquidation and reducing costs. In broad terms, the Scheme provides for the full and final discharge of the Scheme Claims by the Scheme Creditors in return for them receiving a payment which, together with the interim dividends in the past, will give them the anticipated total recovery (calculated on a best case basis) much earlier than if the liquidation were to continue without the Scheme.

The Scheme also operates to impose a cut-off date by which creditors must, if not already admitted in LBAH’s liquidation, submit claims against LBAH, failing which they will be barred from participating in the Scheme or the liquidation.

LBHI has contractually agreed to fund the payments to the Scheme Creditors. Upon discharge of the Scheme Claims, LBHI and Affiliates will remain as creditors of LBAH and continue to be dealt with in the ordinary course of its liquidation."

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