The Joint Administrators (the “Administrators”) of Lehman Brothers International (Europe) (“LBIE”) have issued a notice, dated December 4, 2009 (the “Notice”), pursuant to Rule 2.95(1) of the U.K. Insolvency Rules 1986, announcing their intent to make a distribution (by payment of an interim dividend) to preferential creditors (if any) and unsecured, non-preferential creditors of LBIE. The Notice was authorized on December 2, 2009, by an order of the High Court of Justice (Companies Court) in London (the “U.K. Court Order”).
As previously described in our Alert of Oct.
The Joint Administrators (the “Administrators”) of Lehman Brothers International (Europe) (“LBIE”) announced on Oct. 5, 2009, that they are developing a contractual (i.e., non-judicial) alternative to their proposed Scheme of Arrangement, which is the subject of an appeal following a decision by the High Court in London that it lacks jurisdiction to implement the scheme.
The Prior Proposed Scheme of Arrangement
On July 14, 2009, the Joint Administrators of Lehman Brothers International (Europe) ("LBIE"), made an application to the High Court in London with respect to a Scheme of Arrangement (the "Scheme") (the UK administration’s analogue to a Chapter 11 plan of reorganization) designed to provide procedures to be used by LBIE for the purpose of returning so-called “trust property” held by LBIE to certain of its customers (“Creditors”). Among the primary purposes of the Scheme is the desire to avoid the need for a case-by-case resolution of the claims made by LBIE's Creditors.
In his Pre-Budget Report delivered on 24 November 2008, UK Chancellor of the Exchequer Alistair Darling announced the Government’s intention to introduce special insolvency procedures for investment firms holding client assets or client money.
The procedures will be introduced by secondary legislation under the Banking Bill (which was introduced into Parliament in October 2008) following a government sponsored review by an expert liaison group.
The review, to be concluded by summer 2009, will consider, inter alia:
Yesterday, the United Kingdom’s Commercial Secretary to the Treasury launched a consultation on a new special-resolution regime, Special administration regime for investment firms, to strengthen the government’s ability to handle future insolvencies of failing investment banks to minimize cost and disruption of the overall national financial system.
Citing public opposition to the bill, on Tuesday the president of Iceland vetoed legislation that would provide a state guarantee for repayment of approximately $5 billion of loans provided by the U.K.
Today, the U.K. Treasury and Northern Rock plc separatelyannounced that the restructuring of Northern Rock will take place on January 1, 2010 (Transfer Date).
Today, HM Treasury announced the conclusion of discussions with Lloyds Banking Group (Lloyds) and Royal Bank of Scotland Plc (RBS), regarding their participation in the U.K.