Senior Creditors or CTs' Holders Money? When will this Hell End? Reallocation or Theft in Bankruptcy? Too many moving parts in Bankruptcy? Keep it simple and turn the lights back on. LOL
Quarterly Financial Report as of June 30, 2023 (Unaudited) Page 14 Note 4 – Legal Proceedings (continued) (a) ECAPS LBHI owns a claim of GBP 1.1 billion related to the subordinated debt issued by LBH PLC, a non- controlled affiliate in administration in the UK. LBH PLC also has outstanding subordinated notes owned by three third party trusts known as ECAPS I, II, and III. A dispute over the relative priority of these subordinated debt instruments issued by LBH PLC was litigated in the UK courts. The Court of Appeal held that the subordinated notes owned by ECAPS I- III are senior to the subordinated debt owned by LBHI. In August 2022, the Supreme Court declined to consider LBHI’s appeal of that decision. On March 14, 2023, LBH PLC filed an application to the High Court of Justice in England for directions (the "Application") on certain legal issues which are relevant to the priority and payment of future distributions to holders of its subordinated debts. The outcome of this Application will have a material effect on LBHI recoveries. On May 4, 2023, a procedural case management hearing was held in the UK High Court pertaining to this Application. The trial is scheduled to begin on October 9th. For further information, please refer to the “ongoing litigation” section of LBH PLC’s website: www.pwc.co.uk/services/business- recovery/administrations/non-lbie-companies/lbh- plc-in-administration.html Solely for the purpose of maintaining the confidentiality of its assumptions relating to these uncertain recoveries, which are informed by privileged advice from counsel, LBHI treats recoveries from this matter as an Excluded Recovery in its June 30, 2023 Cash Flow Estimates. As a result, LBHI excludes from its June 30, 2023 Cash Flow Estimates all potential recoveries from its subordinated debt claim against LBH PLC (including indirectly LBIE’s litigation against AGR), and its agreements with holders of approximately 16.8% of the ECAPS.
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(b) LBIE vs. AG Financial Products (“AGR”) On November 28, 2011, LBIE sued AG Financial Products Inc. (“AGR”), an affiliate of Assured Guaranty Corp., which in the past had provided credit protection to counterparties under credit default swaps. LBIE’s complaint, which was filed in the Supreme Court of the State of New York (the “New York Supreme Court”), alleged that AGR improperly terminated nine credit derivative transactions between LBIE and AGR and improperly calculated the termination payment in connection with the termination of 28 other credit derivative transactions between LBIE and AGR. LBIE asserted in the complaint that AGR owes LBIE a termination payment of approximately $1.4 billion. On July 2, 2018, the New York Supreme Court dismissed LBIE’s claims with respect to the nine allegedly improperly terminated transactions in their entirety. That ruling remains subject to appeal. The Court also dismissed the claim that AGR breached its implied duty of good faith and fair dealing with respect to the valuation of the 28 terminated credit derivatives transactions but found that there is a genuine question of fact as to the reasonableness and good faith of AGR’s calculation of its loss, and which allowed LBIE to proceed with its claim against AGR for breach of contract. The trial in the New York State Supreme Court, Commercial Division concluded on November 19, 2021. On March 8, 2023, the Court issued its decision in favor of AGR and granted AGR’s claim. LBIE will have 30 days from entry of the judgment to file a Notice of Appeal. AGR filed a motion on April 13, 2023 seeking to have interest on the judgment applied at 9% compounding based upon the ISDA and LBIE opposed that motion arguing that the applicable rate was 8% simple as dictated by LBIE’s Scheme. The Court denied AGR’s motion and determined that the appropriate rate was 8% simple. AGR filed a Notice of Appeal of that decision and filed its appeal brief on September 22, 2023. Solely for the purpose of maintaining the confidentiality of its assumptions relating to these uncertain recoveries, which are informed by privileged advice from counsel, LBHI treats the AGR litigation as an Excluded Recovery herein and therefore excludes estimates for the AGR litigation from these June 30, 2023 Cash Flow Estimates. 08-13555-mg Doc 61613 Filed 09/28/23 Entered 09/28/23 08:26:02 Main Document Pg 14 of 18
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