Replies to post #107639 on Lehman Brothers Financial SA (LEHNQ)

[JERSEYHAWG]

I bought them because I thought lehman was to big to sink and would never die.

We will see about that.

[cottonisking]

Basis:

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF LEHMAN BROTHERS HOLDINGS PLC (IN ADMINISTRATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
B E T W E E N:
THE JOINT ADMINISTRATORS OF LEHMAN BROTHERS HOLDINGS PLC (IN
ADMINISTRATION)
Applicants
-and-
(1) LB GP NO 1 LIMITED (IN LIQUIDATION)
(2) LEHMAN BROTHERS HOLDINGS INC.
(3) DEUTSCHE BANK A.G. (LONDON BRANCH)
Respondents
POSITION PAPER OF THE JOINT LIQUIDATORS OF LB GP NO 1 LIMITED (IN
LIQUIDATION)
Introduction
1. This Position Paper is filed on behalf of the Joint Liquidators (“the JLs”) of LB GP No. 1 Limited

(in liquidation) (“GP1”), in accordance with paragraph 2 of the 4 May 2023 Order of Mr Justice
Hildyard, to outline GP1’s position on:
1.1 the application brought by the Joint Administrators (“JAs”) of Lehman Brothers Holdings
plc (“PLC”) dated 14 March 2023 (“the Directions Application”);
1.2 PLC’s further application dated 25 April 2023 (“the Distribution Application”); and
1.3 the application brought by the Third Respondent, Deutsche Bank (“DB”) dated 27 April
2023 (“the Strike-Out Application”). (Together, “the Applications”).
2. The Applications arise in consequence of the Court of Appeal’s judgment in these proc
.
.
.
14
41.2 Thus, the quoted phrase encompasses payments made to the Holder in respect of liabilities
which are subordinated to the obligations contained within the ECAPS Guarantees.
41.3 Whilst the phrase envisages that claims under the ECAPS Guarantees might not be the
lowest ranking debt in the waterfall held by the Holder, it does not overcome the fact that
for Clause 2.11 even potentially to bite on the assets distributed to the Holder, LBHI would
first need to overcome the construction obstacles set out in paragraph 40 above. The
payment to be made by PLC in respect of Claim D would be from PLC to GP1 (as general
partner of the limited partnerships and the payment would be received as assets of the
limited partnerships). The payment to the Holder would in turn be from GP1 (paying away
partnership assets) and on that basis alone Clause 2.11 would not be engaged as those
payments are not “distributions” from or “assets” of PLC.
42. Finally, the ECAPS Guarantees cannot as a matter of law have the effect that LBHI contends
they do. LBHI has not articulated any (and there is no) means by which a deed executed only by
PLC can impose upon non-parties (i.e. GP1 and/or the Holder(s)) trust obligations in respect of
assets acquired pursuant to separate legal arrangements.
43. Without prejudice to the generality of that position, Clause 2.11 of each ECAPS LPA (to which:
(i) PLC as Guarantor under the ECAPS Guarantee; and (ii) Chase Nominees Limited as the
“Initial Limited Partner”; and (iii) GP1 as general partner of the partnerships are parties)
expressly provides that the “the relationship between them does not constitute, and is not
intended to constitute… any form of trust under any applicable law or any form of trust
relationship or equitable relationship under any applicable law.” It is therefore unarguable that
any distribution by PLC to GP1 under Claim D can become impressed with any trust in PLC’s
favour; and there is no mechanism by which such trust can therefore arise upon any onwards
distributions of those funds from GP1 to the Holder(s).
ISSUE 5: If PLC makes distributions on the PLC Sub-Notes but proceeds are thereafter turned
over to PLC, what is the resultant priority as between the PLC Sub-Debt and the PLC Sub-Notes,
in respect of such sums received by PLC?
44. Issue 5 does not arise once Issue 4 is determined correctly.
45. Issue 5 does, however, lay bare LBHI’s attempt to circumvent the relative priority of the PLC
Sub-Notes and the PLC Sub-Debt determined by the Court of Appeal, which is a final judgment
no longer subject to appeal. In expressly asking the court to reconsider the relative priority
between the PLC-Sub-Debt and the PLC Sub-Notes, Issue 5 runs roughshod over the Court of
Appeal’s previous finding. The answer to Issue 5 hinges on the concluding words of Clause 2.11.