April 15 (Bloomberg) -- Lehman Brothers Holding Inc.’s Australian unit sought federal court approval for a creditors’ vote on a proposed claims settlement that will see them getting less than half of what they are owed, a litigation funder said.
Creditors will be paid between 39.9 Australian cents and 49.2 cents for each dollar of debt in the local currency, IMF (Australia) Ltd. said in a statement today. U.S. insurers agreed to pay $45 million to fund the settlement, and IMF will drop a class action lawsuit against the firm as part of the agreement, outlined in an April 12 filing, according to the statement.
“We can strive for perfection but we could be here for years to come,” Marcus Ayres, a partner at PPB Advisory, the liquidator of the Lehman unit, said in a phone interview today. He said that option would be “silly.”
Lehman Brothers Australia appointed a voluntary administrator under the country’s bankruptcy laws on Sept. 26, 2008, after Lehman Brothers Holdings, then the fourth-largest investment bank in the world, filed for bankruptcy. The securities firm had $613 billion in debt, making it the biggest bankruptcy in U.S. history.
PPB Advisory plans to ask for approval of the meeting of creditors at a May 7 hearing.
If approved, the creditors’ vote would be held in the first week of June, and a final court hearing to pass the settlement will probably take place in the middle of that month, Ayres said. If everything goes as planned, payouts to creditors would be finished in November, he said.
The U.S. insurers agreed to pay the $45 million on the condition they would be granted a release protecting them from any future lawsuits, Ayres said.
The Australian unit has assets of between A$297 million ($310 million) and A$303 million and creditors are owed between A$596 million and A$654 million, according to the IMF statement. IMF’s clients are owed A$143.5 million, it said.
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