Replies to post #106657 on Lehman Brothers Financial SA (LEHNQ)

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Witness Statement
Lehman Brothers Holdings Plc (In Administration)
E J Macnamara
Sixth
"EJM6"
14 March 2023

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (CHD)
CR-2008-000026
IN THE MATTER OF LEHMAN BROTHERS HOLDINGS PLC (IN ADMINISTRATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
BETWEEN:
THE JOINT ADMINISTRATORS OF LEHMAN BROTHERS HOLDINGS PLC (IN ADMINISTRATION)
Applicants
- and -
(1) LEHMAN BROTHERS HOLDINGS INC
(2) LB GP NO.1 LIMITED (IN LIQUIDATION)
(3) DEUTSCHE BANK A.G. (LONDON BRANCH)
Respondents
SIXTH WITNESS STATEMENT OF EDWARD JOHN MACNAMARA

I, Edward John Macnamara, of 7 More London Riverside, London, SE1 2RT, will say as follows:
1. I am a partner in the restructuring practice at PricewaterhouseCoopers LLP ("PwC"), and
have been a licensed insolvency practitioner for over 13 years.
2. Since 16 July 2018, I have been one of the joint administrators of Lehman Brothers Holdings
Plc (In Administration) ("PLC", and the "PLC Administrators"). In recent years, I have had
principal day-to-day responsibility for the conduct of PLC's administration in consultation
with my fellow PLC Administrators. Each of my fellow PLC Administrators is also a licensed

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Lehman Brothers Capital Funding II LP and Lehman Brothers Capital Funding III
LP, respectively – issued their ECAPS to investors.
THE PLC SUBORDINATED GUARANTEES
43. I have referred above to, and exhibited, the offering circular or prospectus by which each
Partnership marketed ECAPS to underlying investors. In each case, that document explains
that as part of the relevant transaction, PLC would also give a "Subordinated Guarantee"
(an ECAPS Guarantee, as defined at paragraph 27(c) above). Each offering circular or
prospectus then goes on to include a form of unsigned ECAPS Guarantee to be given by
PLC as part of each transaction – see in particular pages 205 to 210 in respect of Lehman
Brothers Capital Funding LP, pages 259 to 263 in respect of Lehman Brothers Capital
Funding II LP and pages 356 to 360 in respect of Lehman Brothers Capital Funding III LP.
44. To date, the PLC Administrators are aware of copy signed execution pages in respect of
two out of the three ECAPS Guarantees. In each case, the front page of the relevant
Guarantee and the execution page were preserved. These refer to the ECAPS Guarantees
provided by PLC in respect of the transactions entered into with LB UK Capital Funding II
LP (see execution pages at pages 418 to 419) and LB UK Capital Funding III LP (see
execution pages at pages 420 to 421).
45. Although an executed copy of the third ECAPS Guarantee has not been located, as things
stand the PLC Administrators have no specific reason to believe that the ECAPS
transaction entered into with LB UK Capital Funding LP was not undertaken in accordance
with its prospectus terms, in the same manner as the other two ECAPS transactions for
which execution pages have been identified. In this regard I note that notwithstanding no
execution pages having been specifically identified at that time, the previous Court
directions application to which I have referred was issued and proceeded on the assumption
that such ECAPS Guarantees were executed by PLC for the purposes of the Court
providing guidance as to the priority of any liability which might ultimately be established
under those ECAPS Guarantees.
THE PREVIOUS COURT APPLICATION
46. On 16 March 2018, the PLC Administrators issued an application for the Court’s directions.
That application was focused on certain questions concerning the respective priorities of
PLC’s subordinated liabilities as among themselves, as well as certain related questions.
47. On 24 July 2018, Mr Justice Mann ordered, amongst other things, that (i) the parties file
and serve position papers setting out in detail their position in respect of each of the issues
identified in the application, and (ii) the PLC Administrators' application be heard alongside

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is referred to in (b) or (c) below and any other liability expressed to rank pari passu
with or junior to this Subordinated Guarantee)".
80. In their letters on behalf of LBHI dated 6 December 2022, 30 January 2023 and 7 February
2023 to which I refer in paragraphs 69 and 71 above, Weil Gotshal addressed this issue
(see pages 648 to 652, 679 to 680 and 688 to 690). The Court is referred to those letters
but in summary, I understand that LBHI contends that if PLC makes a distribution on the
PLC Sub-Notes to the Partnerships or to LB GP No1 on the Partnerships’ behalf, and then
LB GP No1 causes the Partnerships to make a distribution on the ECAPS, the ECAPS
Holder or Holders are then obliged by Clause 2.11 to hold any such sums which they
receive on trust for PLC and return them to PLC. I also understand LBHI to contend that in
such circumstances, those funds returned to PLC would then be available for PLC to pay
the PLC Sub-Debt.
81. LB GP No1 and Deutsche disagree with LBHI’s position on this issue, and have contended
that this is not something which Clause 2.11 requires in such a scenario.
82. Again without in any way waiving privilege, the PLC Administrators have been considering
this point since it was raised by LBHI and any implications which it may have for distributions
on PLC’s subordinated debts.
83. Initial consideration was given to whether an appropriate possible solution might have been
for the PLC Administrators to hold back funds from distribution on the PLC Sub-Notes to
give practical effect to any ultimate obligation for such funds to be returned to PLC under
Clause 2.11 if LBHI’s argument is correct. However, CRS on behalf of LB GP No1 in its
letter dated 31 January 2023 (see pages 681 to 683), and Weil Gotshal on behalf of LBHI
in its letter dated 7 February 2023 (see pages 688 to 690), each made clear that neither
considered that PLC reserving in respect of any payment which would otherwise be made
on the PLC Sub-Notes was an appropriate approach to the Clause 2.11 issue, even though
each take opposing views on the substance of that issue. In those circumstances, and in
circumstances where the PLC Administrators obviously wish to keep making distributions
as and when they can and without delay to progress the administration of the estate, the
proposed questions for the Court on this Application in respect of Clause 2.11 were
updated.
84. The PLC Administrators are currently liaising with the Joint Liquidators of LB GP No1 to
seek to agree the specific details of the PLC Sub-Notes claim in the hope that that debt can
be admitted and agreed, and an initial distribution on it made.
85. The PLC Administrators seek the following directions from the Court in respect of Clause
2.11 on this Application:

[stoxjock]

Yes...The UK Courts 'Side with the Main St. Public' when it comes to enforcing the Security Holders' Rights where as in the Banana Republic called the USA, the Courts are "In the Pockets of Big Wall St Firms & their Law Firms"...WaMu, LBHI, FnF...This has been proven again & again in the course of BK Courts' proceedings (And Even the US Supreme Court proceedings in cases of FnF)!