Lehman Brothers Financial SA (LEHNQ)

[cottonisking]

LBHI and LBIE are trying to become Operating Companies:

Following a hearing in January 2021, the High Court (Mr Justice
Hildyard) handed down its judgment on 11 October 2022, finding
in favour of the Administrators on all points. As a result, the
Court has confirmed that, as and when LBIE exits administration
and publishes a statement confirming that it has a surplus of
assets over liabilities and is now able to pay its debts as they fall
due, there will be no continuing events of default.
The Administrators are in the process of seeking to agree the
form of the order detailing the Judge’s findings, together with a
number of consequential matters, including costs and
permission to appeal. If these cannot be agreed, then they will
be dealt with at a short consequential hearing, likely to be heard
in late November 2022.
German tax investigation
The Administrators have continued to communicate with the
German Public Prosecutor who in turn has continued working
with the German Court to progress the necessary formal steps to
sanction the court order ratifying the consensual arrangement.
The Section 30 Order was received on 24 May 2022 and
payment of the amount due of £40m was promptly made,
bringing matters to a conclusion.
MCF
As you are aware LBIE entered into a compromise arrangement
with MCF’s creditors in April 2021, whereby all other creditors of
MCF were subordinated to LBIE. As part of this agreement, LBIE
became the beneficiary of a trust over MCF's shares in its
solvent subsidiaries, SPML and PML. LBIE has received £1.5m
in dividends under this trust in the Reporting period and total
dividends for SPML and PML of £9m since the restructure of
MCF. During the period, we have conducted a detailed review of
SPML and PML to help shape and model potential exit
opportunities at the appropriate time.
AGFP litigation
Following the trial before Justice Crane at the end of 2021, the
parties were required to submit two rounds of post-trial briefs
during this Reporting period. Extensive work went into LBIE’s
submission, with the first post-trial brief being submitted and
exchanged with AGFP on 22 April 2022 and a robust reply to
AGFP’s post-trial brief being submitted on 21 June 2022.
We were anticipating a Closing Hearing later this year however
Justice Crane, having seen the briefs, has advised that she does
not require closing arguments. Justice Crane has previously
indicated her intention to issue her decision within one year of
trial, which concluded in November 2021.
Despite a ruling being expected in the next Reporting period, if
either LBIE or AGFP appeals the decision, there could be a
substantial delay in getting an appeal heard in the US Courts. It
is currently anticipated that the appeal process could take up to
3 years to be concluded.
Other potential recoveries
The Administrators have continued to progress resolution of the
remaining portfolio of residual assets comprising illiquid
securities, structured notes and amounts due from Affiliates and
other parties, where in certain cases, LBIE’s claims have not
been agreed. Matters of note are set out below.
The Administrators have continued to pursue recovery of a claim
into an overseas liquidation, where LBIE is also a member of the
Liquidation Committee. The liquidators of that entity are now in a
position to make a significant interim distr bution which will be
received in the next Reporting period.
2 Lehman Brothers Internat