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Lehman U.K. Unit to Make First Payment to Creditors by Year End
The administrator of Lehman Brothers Holdings Inc. (LEHMQ)’s London unit said it will start returning money to creditors before the end of 2012, more than three-and-a-half years after the bank’s collapse sparked a global financial crisis.
The interim distribution was announced by Lehman Brothers International Europe’s administrator PricewaterhouseCoopers LLP in a report on its progress today. The firm didn’t say how much would be paid out.
“There does now seem to be sufficient clarity that we can plan to make a first interim distribution to unsecured creditors by the end of this year,” said Tony Lomas, a partner at PwC.
The move follows a ruling by the U.K. Supreme Court in February on when bankrupt financial firms’ clients get priority in an administration proceeding.
Confusion over the status of Lehman clients, and the bank’s practice of mixing customer money with its own, led to delays in the return of funds and assets held by the London unit.
In its report on the administration, PwC said it expected to recover as much as 13.4 billion pounds ($21.4 billion) from the unit, after estimated costs. Total claims against the estate from unsecured creditors will be in the range of 14.7 billion to 47.9 billion pounds.
Assets valued at about 13.2 billion pounds that were held by the U.K. unit have been returned to clients since its parent company collapsed and filed the largest ever financial bankruptcy in September 2008.
The London unit is involved in legal disputes with other Lehman affiliates and clients over the ownership of assets.
A claim by Curacao-based Lehman Brothers Securities NV against the unit for 6.7 billion pounds has been withdrawn, PwC said. Settlements have also been reached with two U.S. and one Hong Kong affiliate in the last six months.
PwC said its fees for the administration reached 495 million pounds in March, up from 403 million pounds in September 2011.
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