Replies to post #109318 on Lehman Brothers Financial SA (LEHNQ)

[cottonisking]

October 10, 2023 Re Lehman Brothers Holdings PLC (In Administration) Day 2
1 Tuesday, 10 October 2023
2 (10.30 am)
3 Housekeeping
4 MR BELTRAMI: Subject to your Lordship, it has been agreed
5 that I hand to you this morning, following our
6 discussion yesterday morning, the framework agreement,
7 and show you just one or two points by reference to our
8 draft order.
9 MR JUSTICE HILDYARD: Thank you very much. I’m just going
10 to tune in, or whatever the proper expression is, to
11 Opus. (Handed)
12 Yes, I ’m so sorry.
13 MR BELTRAMI: My Lord, only to show you how we have got to
14 that position on issue 2, so that your Lordship
15 understands, to the extent you need to, the background.
16 If you turn to page 9 of the agreement, clause 2
17 deals with the distributions of the remainder of the
18 estate, obviously in respect of the subordinated debt.
19 And if you cast your eyes down 2.2, 3 and 4, there are
20 three tiers of distribution . Something called the
21 tier X distribution is , if you like , a fixed agreement
22 to distribute in those proportions the first amount
23 specified of available funds for subordinated creditors,
24 so that’s baked into the agreement as a matter of
25 contract.
1
1 The tier Y distribution applies for the next layer
2 of funds, if available , as your Lordship can see. And
3 there are at this point, and this feeds into the issue 1
4 debate which we are having, and I’m told to say that
5 no one can rely upon the terms of this in respect of the
6 argument, but I haven’t heard anyone seek to do so, so
7 I don’t think that is a point we need to worry about too
8 much.
9 There are three alternative distributions under tier
10 Y, one called an ECAPS outcome, one under an LBHI
11 outcome, and one under an alternative outcome. And if
12 you go back to page 6, at the top of page 6 the
13 definition of ECAPS outcome, which essentially means if
14 GP1 wins. And on page 7 there is an LBHI outcome, which
15 gives the plaudits to Mr Allison’s client .
16 The alternative outcome, if you go back to page 10,
17 is anything that isn’t 1 or 2. And in that event, as
18 your Lordship can see, there will need be
19 a recalibration depending on what it is, if it is
20 exists .
21 MR JUSTICE HILDYARD: That is a case I sort of go off piste,
22 as it were.
23 MR BELTRAMI: I haven’t put that in my notes, my Lord. Yes,
24 it is a for the avoidance of doubt clause. And if that
25 were to occur, then the parties would have to reconsider
2
1 what the outcome would be, and at that point apparently
2 issue 2 may come into play.
3 So that is the reason for the slightly delphic part
4 of the consent order before your Lordship. It is not
5 necessarily something to be encouraged, but it’s an
6 outcome which is --
7 MR JUSTICE HILDYARD: You have to provide for any
8 eventually, as it were.
9 MR BELTRAMI: In the circumstances, my Lord.
10 MR JUSTICE HILDYARD: Yes, as when on Sunday (inaudible).
11 MR BELTRAMI: So, my Lord, that I think is the only part of
12 the agreement that I have to show your Lordship.
13 MR JUSTICE HILDYARD: Yes.
14 MR BELTRAMI: Of course, if you wish to read any of it over
15 lunch and ask any questions, absolutely fine . But
16 specifically in relation to issue 2, that is the only
17 circumstance in which issue 2 has a danger of coming
18 back, but it was provided for, for that eventuality .
19 MR JUSTICE HILDYARD: The eventuality being the alternative
20 outcome.
21 MR BELTRAMI: The alternative outcome, whatever it may be.
22 MR JUSTICE HILDYARD: Okay, all right. So there will be
23 a penalty for going off-piste.
24 MR BELTRAMI: Yes. If we are back again, my Lord, we know
25 the cause of it , but ...
3
1 MR JUSTICE HILDYARD: Well, thank you for making it
2 available . I don’t either approve or disprove it ,
3 I simply note this is the basis on which you have
4 proceeded. My questions really relate to finality .
5 MR BELTRAMI: Yes.
👉️6 MR JUSTICE HILDYARD: And in that context, I noticed two
7 things which you may assist me on. The first is that DB
8 is described as an informal representative of other
9 persons interested in the same way, and I take it that
10 there is no issue in that regard, and I can take it that
11 the issue which will have been argued by DB one way or
12 the other will be, in effect , concluded. There might
13 not be a strict issue estoppel but it is very late , you
14 haven’t advertised the fact of this congregation, it
15 should be sufficient . Is there anything I need to be
16 wary of in that respect?
17 MR BELTRAMI: I don’t believe there is. Your Lordship is
18 right that DB’s position has always been not a formal
19 representative of the ECAPS holders.
20 MR JUSTICE HILDYARD: Yes.👈️
21 MR BELTRAMI: And it has been argued on that basis
22 throughout.
23 MR JUSTICE HILDYARD: Yes.
24 MR BELTRAMI: My understanding is there a level of agreement
25 amongst ECAPS holders to this agreement, but it is not
4
Opus 2
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