The High Court in London gave judgment on Friday, 3 July 2020 on the relative ranking of over $10 billion of subordinated liabilities in the administrations of two entities in the Lehman Brothers group.

The Court of Appeal in London today gave judgment on Parts A and B of the Lehman Waterfall II Appeal, as part of the ongoing dispute as to the distribution of the estimated £8 billion surplus of assets in the main Lehman operating company in Europe, Lehman Brothers International (Europe) (LBIE).

The Supreme Court in London today gave judgment in the Waterfall I appeal, a dispute as to the distribution of the estimated £8 billion surplus of assets in the main Lehman operating company in Europe, Lehman Brothers International (Europe) (LBIE).

LBIE entered administration on 15 September 2008 and has now paid its unsecured creditors dividends of 100p in the £. The Waterfall I Supreme Court appeal addressed some of the key issues as to who should receive the surplus, which we discuss below.

“So-called” Currency Conversion Claims

Of general interest is the appeal in the case of Horton v Henry, on which we reported in our January 2015 update. In Horton, the High Court declined to follow a previous ruling, and decided that a bankrupt could not be compelled to access his pension savings to pay off creditors.

Declining to follow a 2012 decision, the High Court has ruled that a bankrupt’s unexercised rights to draw his pension did not represent income to which he was entitled within the meaning of the Insolvency Act 1986, and so did not form part of the bankruptcy estate.

Background

Again, of interest to all schemes providing defined benefits is the recent settlement in the litigation involving the Lehman Brothers Scheme, where the payment of £184 million, representing costs of the buying-out benefits, has been agreed.

Following a detailed investigation by TPR commencing in 2008, and a legal battle through the hierarchy of courts up to the Supreme Court (SC), members of the Lehman Brothers Pension Scheme will receive their full benefits after a settlement was reached on 18 August 2014.

In the case of In the matter of Construction Confederation and In the matter of the Insolvency Act 1986 [2009] EWHC 3551 (Ch), the trustees of the Construction Confederation Staff Pension Scheme have obtained an order for winding up of the sponsoring employer, an unincorporated association.

On 9 November, the PPF published proposals for the 2011/12 pension protection levy year which aim to improve the way the insolvency risk for sponsoring employers is assessed. The proposals reflect industry feedback and a review of methodology and insolvency probabilities carried out by Dun & Bradstreet (D&B).

The key changes include: