" Before: THE HONOURABLE MR JUSTICE HILDYARD - - - - - - - - - - - - - - - - - - - - - Between: IN THE MATTER OF LB HOLDINGS INTERMEDIATE 2 LIMITED (IN ADMINISTRATION) AND IN THE MATTER OF LEHMAN BROTHERS LIMITED (IN ADMINISTRATION) AND IN THE MATTER OF LEHMAN BROTHERS INTERNATIONAL (EUROPE) (IN ADMINISTRATION) AND IN THE MATTER OF LEHMAN BROTHERS HOLDINGS PLC (IN ADMINISTRATION) AND IN THE MATTER OF THE INSOLVENCY ACT 1986 - - - - - - - - - - - - - - - - - - - - - THE HONOURABLE MR JUSTICE HILDYARD Felicity Toube QC (instructed by Linklaters LLP) for the LBEL Administrators Tony Beswetherick (instructed by Hogan Lovells International LLP) for the LBH Administrators Peter Arden QC and Rosanna Foskett (instructed by Dentons LLP) for the LBHI2 Administrators Philip Marshall QC and Ruth den Besten (instructed by Dechert LLP) for the LBL Administrators
William Trower QC and Alexander Riddiford (instructed by Linklaters LLP) for the LBIE Administrators Hearing dates: 24 July 2017 - - - - - - - - - - - - - - - - - - - - - Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. . . . 9. There is a complex web of substantial claims and cross-claims between the various companies in the Lehman Group. As a result, several of the parties to the Proposed Settlement have submitted numerous claims in the administrations of other parties, each of which is typically valued in the tens or hundreds of millions of pounds. Of particular significance for the purposes of Waterfall III (described below) are two £10 billion claims submitted by LBIE, one in each of LBL’s and LBHI2’s administrations, in respect of those companies’ respective contingent liabilities to LBIE as contributories under section 74 (“section 74”) of the Insolvency Act 1986 (“the 1986 Act”) which arose according to the decisions at first instance and of the Court of Appeal in the Waterfall I litigation referred to below.
10. As of the date of the present applications: i) The LBIE Administrators have paid dividends to LBIE’s ordinary unsecured creditors, with proved claims of 100 pence in the pound (in aggregate) in respect of such claims. ii) The LBL Administrators have paid a dividend of 100 pence in the pound to former employees of LBL with preferential unsecured claims (comprising claims for unpaid wage and holiday pay) and a first interim dividend of 1.66 pence in the pound to ordinary unsecured creditors. iii) The LBHI2 Administrators obtained permission on 15 June 2017 to make interim distributions to unsecured creditors, subject to a requirement to give four weeks’ notice to the LBIE Administrators before filing a notice of intended distribution. However, the LBHI2 Administrators have not made any distributions to creditors to date. iv) The LBEL Administrators have paid dividends to LBEL’s ordinary unsecured creditors totalling 100 pence in the pound. In addition, the LBEL Administrators received permission of the Court on 24 July 2017 to appoint a director of LBEL and authorise him and LBEL’s sole member, LBH, to implement (after reserving for statutory interest and other matters) a capital reduction and distribution to LBH. v) The LBH Administrators have paid dividends to LBH’s unsecured, nonpreferential (unsubordinated) creditors of 6.08 pence in the pound in respect of such claims. . . . 44. Finally, Mr Lewis identifies in his witness statement, the following advantages of the Proposed Settlement for LBH and its creditors:
THE HONOURABLE MR JUSTICE HILDYARD Approved Judgment Lehman Brothers Waterfall III i) LBL will withdraw and release the claims pursued against LBH in Waterfall III, by which LBL seeks to pass on any liability for a contribution claim to LBH or to rectify LBIE’s share register so as to substitute LBH as a member of LBIE in its place. ii) In addition to removing the threat of that liability, such release will remove the need for LBH to reserve for that claim (and no other party has asserted any claim of that sort), thereby removing the present block upon any distributions being made by LBH to its creditors (which might otherwise remain for several years to come while Waterfall III runs its course). iii) The dismissal of Waterfall III will lead to substantial savings in legal costs and expenses. iv) LBHI2 will not be obliged to continue to reserve for a contingent contribution liability as a member of LBIE, meaning that its administrators would be able to pay dividends to its admitted unsecured creditors. LBH has a substantial unsecured claim in LBHI2 which is to be admitted and form the basis of distributions to LBH, together with statutory interest, as part of the Proposed Settlement. There is also a possibility that LBH might in due course receive a return from LBHI2 in respect of LBHI2’s subordinated debt liability to LBH and any such return will be increased to the extent that LBHI2 makes distributions to its unsecured creditors more quickly and thereby limits the accrual of statutory interest in that estate. v) It is anticipated that as a consequence of the Proposed Settlement, LBEL will make a substantial distribution to LBH as its sole member. vi) There will be an agreed resolution of intercompany positions as between LBH and the other affiliate entities, which reduces the scope for further litigation between those entities."
"Lehman Brothers Holdings plc – In Administration Joint Administrators’ progress report for the period 15 September 2016 to 14 March 2017
12 April 2017 . . . Guarantee creditors As creditors are aware, LBH guaranteed the following Lehman Brothers Capital funds (“the Funds”): ? Lehman Brothers UK Capital Funding LP (ISIN: XS0215349357); ? Lehman Brothers UK Capital Funding II LP (ISIN: XS0229269856); and ? Lehman Brothers UK Capital Funding III LP (ISIN: XS0243852562). Investors in the Funds are entitled to submit a claim against LBH for the amount they invested in each fund. However, the guarantee provided by LBH is subordinated to LBH’s ordinary unsecured and other subordinated creditors. The Administrators estimate that there is unlikely to be any surplus available to pay a dividend to creditors with guarantee claims. The Administrators understand that certain investors in the Funds have taken steps to re-instate the general partner of the Funds, LB GP No 1 Limited (“LBGP”), with a viewto providing a conduit to a potential subordinated claim into LBH. The Administrators also understand that LBGP has been placed into creditors’ voluntary liquidation The liquidators are BruceMackay and MatthewHaw (“the Liquidators”) of RSM Restructuring Advisory LLP, based at 25 Farringdon Street, London EC4A 4AB. Investors should contact the Liquidators with regard to potential claims."
The London courts added LB GP No.1 Ltd. to the Register of Companies effective February 3, 2017. Just after the February 1, 2017 LBHI and JPMCB Settlement Agreement was announced to the public and prior to Judge Richard J. Sullivan's Affiliate order (order 115 signed on February 4, 2016) one year anniversary date (February 4, 2017).
***
"Court OKs Move By Lehman Brothers Unit To Dodge Tax By Alex Davis Law360, London (August 4, 2017, 5:41 PM BST) -- London’s High Court has agreed to let the administrators for a unit of defunct investment bank Lehman Brothers appoint a company director in order to distribute assets to a separate Lehman unit, a move that will allow it to avoid capital gains tax and speed up the prospect of settling a suit over related assets.
Judge Robert Hildyard, who agreed to the request at the end of July before publishing his detailed reasons for the decision on Thursday, said the proposal was “legally permissible as well... "
*** SOURCE: Lehman Brothers UK Capital Funding IV LP June 23, 2017 07:00 ET
Lehman Brothers UK Capital Funding LP: Notice to Holders of Preferred Securities LONDON, UNITED KINGDOM--(Marketwired - Jun 23, 2017) - Lehman Brothers UK Capital Funding LP (LSE: 41YF) LSE : 41YF NOTICE TO THE HOLDERS OF: EUR 200,000,000 EURO FIXED RATE ENHANCED CAPITAL ADVANTAGED PREFERRED SECURITIES ("LP IV ECAPS") ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING IV LP ("LP IV") ISIN: XS0282978666 LIQUIDATION OF LB GP NO.1 LTD ("the Company") AND IMPLICATIONS FOR HOLDERS OF LP IV ECAPS THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO THE REGISTERED AND BENEFICIAL OWNERS OF THE SUBJECT SECURITIES. IF APPLICABLE, ALL DEPOSITORIES, CUSTODIANS AND OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUESTED TO EXPEDITE THE RE-TRANSMITTAL TO BENEFICIAL OWNERS OF THE SECURITIES IN A TIMELY MANNER. Your attention is drawn to the formal notice contained in the PDF link below concerning the Company, LP IV and the LP IV ECAPS. In order to view the formal notice, it is recommended that you copy and paste the link into your browser. http://www.rns-pdf.londonstockexchange.com/rns/9507I_1-2017-6-22.pdf If you have any difficulties in opening the link, please contact Samantha Hawkins at RSM Restructuring Advisory LLP by e-mail: Samantha.Hawkins@rsmuk.com. Dated: 23 June 2017 This notice is given by Bruce Alexander Mackay RSM Restructuring Advisory LLP as Joint Liquidator of LB GP No.1 Ltd
*** CASE 11-CV-6760 ***
115 ORDER: The Court is in receipt of two letters from non-party Ricky M. Gregory-dated January 27, 2016 and January 29, 2016, and received in chambers on February 1, 2016 and February 2, 2016, respectively-setting forth his views regarding the proposed settlement in this matter. (Doc. Nos. 113, 114.) Since the settlement agreement is currently being reviewed by the Bankruptcy Court (Doc. No. 111), the Court will take no action on these submissions at this time. (Signed by Judge Richard J. Sullivan on 2/4/2016) (mro) (Entered: 02/05/2016)
***
The UK Preferred Securities (LP IV and LP V) versus LBHI's Preferred Securities connection:
Ranking:
UK Preferred Securities - "The Subordinated Guarantee will rank pari passu with the noncumulative perpetual preferred securities or preferred stock of LBHI (whether or not in issue)."
LBHI Preferred Securities - "on a parity with the most senior preferred or preference stock now or hereafter issued by Lehman Brothers Holdings and with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings,"
Note: The UK Preferred Securities (LP IV and LP V) are junior to LBHI's Preferred Securities.
***
" 8,000,000 Preferred Securities
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST VI
6.24% Preferred Securities, Series N
(Liquidation amount $25 per preferred security)
fully and unconditionally guaranteed, to the extent set forth herein, by
LEHMAN BROTHERS HOLDINGS INC.
Maturity Date January 18, 2054 . . . Deferral of Distributions
If the subordinated debentures are not in default, Holdings can, on one or more occasions, defer interest payments on the subordinated debentures for up to 20 consecutive quarterly periods. A deferral of interest payments cannot extend, however, beyond the maturity date of the subordinated debentures. If Holdings defers interest payments on the subordinated debentures, the trust will also defer quarterly distributions on the preferred securities. During a deferral period, interest on the subordinated debentures would continue to accrue, and, accordingly, distributions otherwise due to you would continue to accumulate. See "Certain Terms of the Subordinated Debentures—Option to Defer Interest Payments" for a discussion of how you will be notified of a deferral of interest by Holdings.
Once Holdings makes all deferred interest payments on the subordinated debentures, it can again defer interest payments on the subordinated debentures as discussed above.
Holdings does not currently intend to defer interest payments on the subordinated debentures. However, if Holdings does defer such interest payments, it will be subject to certain restrictions relating to the payment of dividends on or purchases of its capital stock and payments on its debt securities that rank equal with or junior to the subordinated debentures. See "Certain Terms of the Subordinated Debentures—Option to Defer Interest Payments." . . . Option to Defer Interest Payments
Holdings can defer interest payments on the subordinated debentures for up to 20 consecutive quarterly periods if the subordinated debentures are not in default. A deferral of interest payments cannot extend, however, beyond the maturity date of the subordinated debentures. During the deferral period, interest will continue to accrue on the subordinated debentures, compounded quarterly and deferred interest payments will accrue additional interest. No interest will be due and payable on the subordinated debentures until the end of the deferral period except upon a redemption of the subordinated debentures during a deferral period.
Holdings may pay at any time all or any portion of the interest accrued to that point during a deferral period. At the end of the deferral period or on any redemption date, Holdings will be obligated to pay all accrued and unpaid interest.
Once Holdings makes all interest payments on the subordinated debentures, with accrued and unpaid interest, it can again defer interest payments on the subordinated debentures as described above.
During any deferral period, neither Holdings or any of its subsidiaries will be permitted to:
• pay a dividend or make any other payment or distribution on Holdings' capital stock;
• redeem, purchase or make a liquidation payment on any of Holdings' capital stock;
• make an interest, principal or premium payment, or repay, repurchase or redeem, any of Holdings' S-13
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