Lehman Bros - Cap. Trust IV - Pref''d Series "L" (LEHLQ)

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Wouldn't the BNYM be operating as a clearing house for the individual creditors they represent as the indenture trustee?

http://www.nortonrose.com/knowledge/publications/2010/pub27090.aspx?page=100305170201&lang=de-de

The anti-deprivation principle has been the subject of recent consideration in the UK, Australia, Hong Kong and the USA and has, in some instances, resulted in conflicting decisions. In considering the insolvency-related provisions which should be incorporated into any transaction, it is vital to understand how the anti-deprivation principle may operate in different situations and jurisdictions.
In common law jurisdictions, the leading case on the application of the anti-deprivation principle is the decision in British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 (British Eagle). This decision was considered by the Court of Appeal in Hong Kong in Peregrine Investments Holdings Ltd (In liquidation) v Asian Infrastructure Fund Management Co Ltd CACV 32/2003 (Peregrine) and by the High Court of Australia in IATA v Ansett Australia Holding Ltd [2008] BPIR 57 (Ansett). All these decisions were recently considered by the English Court of Appeal in PERPETUAL Trustee Company Ltd v BNY Corporate Trustees Services [2009] EWCA 1160 (PERPETUAL), leading to affirmation of the operation of the anti-deprivation principle in some instances but rejecting its application in PERPETUAL on the facts. However, on almost identical facts, the decision in PERPETUAL was not followed by the US Bankruptcy Court in Lehman Brothers Special Financing Inc v BNY Corporate Trustee Services Limited (Case No: 09-01242).
As the British Eagle and Ansett cases demonstrate, the anti-deprivation principle is of particular relevance to the operation of clearing houses. By netting off credits and debits a clearing house avoids the requirement for its members to make and receive as between themselves numerous payments in respect of inter-members’ operations and services. To avoid the operation of the anti-deprivation principle, members of a clearing house agree to waive any right to recover a debt as against an individual member in consideration for the right to pursue any claim against the clearing house, the objective being to ensure that inter-membership debts are not treated as individual assets of the members. The British Eagle case concerned the operation of IATA, a clearing house for airlines. British Eagle, having carried passengers for Air France, was owed a certain sum by Air France. Following a creditors’ voluntary winding up, British Eagle’s liquidator claimed that such amount was an asset that should be available to its unsecured creditors. Air France contended that nothing was owed directly to British Eagle, and that, under the clearing house system, British Eagle's only relevant assets or liabilities were rights or obligations as between British Eagle and IATA. The House of Lords held by a single majority, overturning the High Court and a unanimous Court of Appeal, that the clearing house arrangement between airlines for the settlement of credits and debts was ineffective to retain for netting off purposes an identifiable debt owed by one airline to another. The decision highlighted a weakness in the clearing house system of recognising the existence of a specific debt owed by one member to another. As a result, IATA’s regulations were amended so as to make clear that, in agreeing to membership, airlines waived any individual inter-member liability. The purpose of the amendment was to ensure that, in the absence of an asset in the form of a debt, there could be no attempt to dispose of or deal with such property in a manner inconsistent with the relevant insolvency laws.
The effectiveness of this amendment was considered in the Australian Ansett decision. In this case, IATA brought a claim against Ansett for netted off claims. As in British Eagle, Ansett sought to contend that the IATA scheme was contrary to the insolvency legislation on public policy grounds. This argument was rejected by a majority of the High Court of Australia on the grounds that neither the insolvency legislation nor public policy required the imposition of a debtor-creditor relationship in circumstances where the members had at the inception of their membership, agreed that they would not enter into such a relationship.
The Hong Kong Peregrine decision involved a shareholders' agreement under which the shares of one of the parties in a management company could be acquired by the others at par value in the event of an affiliate’s insolvency. It was contended that such a provision breached the anti-deprivation rule in relation to the insolvency of the ultimate parent company, notwithstanding, that it was not a party to the shareholders’ agreement and neither its subsidiary nor sub-subsidiary was insolvent. The view of the majority of the Court of Appeal was that the rule did apply to render the provisions unenforceable because removal of its only asset (the shares in the management company) at an undervalue indirectly reduced its value.