The English Court of Appeal has recently outlined the methodology for calculating interest when a surplus remains following full payment of debts by a company in administration.

In a second application heard on the same day, Hildyard J considered an application by the administrators of Lehman Brothers Europe Limited (LBEL) for directions that would enable a surplus to be distributed to the sole member of LBEL while LBEL remained in administration. The proposed scheme had material benefits for both shareholders and creditors. The administrators acknowledged that the orders sought were an indirect means of circumventing the Insolvency Act 1986 (UK), which does not expressly provide for directors to make distributions during an administration.

In the English High Court, the joint administrators of four English companies within the former Lehman Brothers group sought directions from the Court in respect of a proposed settlement. The settlement would put to rest substantial inter-company claims including those at issue in the 'Waterfall III' proceedings.

The recent Singapore case of Re Lehman Brothers Finance Asia Pte Ltd (in creditors' voluntary liquidation) determined that the debts of a company in foreign currency, which had been admitted in proof by the liquidators, were to be converted at the exchange rate prevailing at the "resolution date". In this context, resolution date means the day the resolution was passed placing the company into liquidation.

This appeal to the Supreme Court of the United Kingdom arose out of the insolvency and administration of the Lehman Brothers Group of companies.  Lehman Brothers International (Europe) (LBIE) was the principal European trading company in the group, and was authorised and regulated by the Financial Services Authority (FSA) prior to being put into administration in 2008.  This appeal (one of many involving the group) related to the provisions of the Clients' Assets Sourcebook issued by the FSA (CASS) that govern the basis on which client money is required to be held by regulated ent

The insolvency proceedings of the Lehman Brothers' group of companies worldwide ("Group") are among the most complicated ones we have seen. A significant factor contributing to the complexity is that many Group entities hold segregated assets (principally securities and funds) for their clients, which may be individuals or entities within or outside the Group.

On 18 May 2010, Lehman Brothers Holdings Inc. and its associated debtors (together, the "Debtors") filed a further six omnibus objections to claims filed in their Chapter 11 proceedings with the US Bankruptcy Court (the "Objections"). The Objections contain orders prepared by the Debtors on behalf of the US Bankruptcy Court which, if granted, will enable the Debtors to disallow and expunge the claims identified in each of the Objections from the register of claims.

Summary

The joint administrators of Lehman Brothers International (Europe) (“LBIE”) have released their second statutory six month progress report for the period 15 March 2008 to 14 September 2009 (the “Report”).

A full copy of the Report is attached, which includes detail about the positions realised and expenses to date. Key points of interest are as follows:

Did you know that a scheme of arrangement can be used to reduce the creditor constituency in a liquidation, so that time and costs can be saved for the benefit of all parties?

The Honourable Mr. Justice Ng of the Hong Kong High Court made an Order sanctioning a scheme of arrangement (Scheme) proposed by the Joint and Several Liquidators (Liquidators) of Lehman Brothers Asia Holdings Limited (LBAH) to be implemented between LBAH and certain of its unsecured creditors (Scheme Creditors).

On a recent Mayer Brown JSM application (on behalf  of the Liquidators of one of the Lehman Brothers  entities) to reduce and expunge proofs of debt, the  Hong Kong High Court has ruled that creditors who  receive an overpayment of dividends due in respect of  a proof of debt which has been “improperly  admitted” (rule 96, Companies Winding-Up Rules)  must give credit for those overpayments before  receiving further dividends in the liquidation (Re  Lehman Brothers Commercial Corp Asia Ltd (“LBCCA”) [2014] HKEC 849) (“Proof Appl