Lehman Brothers Financial SA (LEHNQ)

[cottonisking]

Bonus:

LBF's liquidators continued to reject Enasarco's claim after the English High Court ruling because the English court only ruled on the method of calculating the loss under English contract law and did not determine the final amount of the liability or the claim's validity under Swiss insolvency law. The liquidators maintained their position that the claim should be resolved within the Swiss bankruptcy proceedings, where they asserted Enasarco actually owed LBF money.
Reasons for the Continued Rejection
Scope of the English Ruling: The 2015 English High Court judgment, specifically Fondazione Enasarco v Lehman Brothers Finance SA [2015] EWHC 1307 (Ch), found that Enasarco's method of calculating the loss was valid and reasonable under the terms of the ISDA Master Agreement. However, the court did not determine the final monetary amount owed or make a binding order for payment; it primarily provided a declaratory judgment on the interpretation of the contract's terms.
Swiss Jurisdiction: The LBF liquidators consistently argued that the determination of claims against the LBF bankruptcy estate was a matter for the Swiss insolvency proceedings, which were recognized as the primary forum for the liquidation. The English court's decision was limited to the contractual dispute and did not override the Swiss court's jurisdiction over the insolvency process itself and the ranking of claims.
Disputed Net Position: The liquidators' initial rejection in 2013 was based on their assertion that Enasarco (through the special purpose vehicle, ARIC) owed LBF approximately US$30.8 million. The English ruling, while favoring Enasarco's calculation method, did not automatically force the liquidators to accept the claim in the Swiss schedule. The actual determination of the net liability and its inclusion in the formal schedule of claims remained subject to the Swiss legal process.
Procedural Strategy: The liquidators chose to deal with all claims only in the Swiss proceedings, compelling Enasarco to challenge the rejection in the Swiss courts to preserve its rights within the bankruptcy estate.
In essence, the English High Court provided a crucial legal interpretation that strengthened Enasarco's position, but the final, binding decision on whether the claim would be accepted for payment, and for what amount, rested with the Swiss bankruptcy court applying Swiss insolvency law.