The liquidator for Lehman Brothers Holding Inc.’s Australian unit won federal court approval for a creditors’ vote on a proposed claims settlement giving them as much as about half of what they’re owed.
Creditors will be paid between 33 Australian cents and 49.9 cents for each dollar of debt in the local currency, John Sheahan, a lawyer for PPB Advisory, the liquidator, said at a hearing in federal court in Sydney today.
U.S. insurers agreed to pay $45 million and Australian insurers A$3 million ($2.9 million) to fund the settlement, Sheahan said. Litigation funder IMF (Australia) Ltd. previously agreed to drop a class action lawsuit against the firm as part of the settlement.
“No one can be paid until that litigation is resolved,” Sheahan said.
“And that could take years,” Federal Court of Australia Justice Peter Jacobson said.
Lehman Brothers Australia appointed a voluntary administrator under the country’s bankruptcy laws on Sept. 26, 2008, after Lehman Brothers Holdings Inc., 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.
The meeting of creditors will be held June 19, with a request for final approval from the court for the settlement scheduled for June 27, Sheahan said.
The Australian unit has assets of between A$297 million and A$303 million and creditors are owed between A$596 million and A$654 million, according to an IMF statement in April. IMF’s clients are owed A$143.5 million, it said.
Lehman’s Australian unit was found liable in September for losses incurred by three towns that bought securities whose value collapsed following the global financial crisis.