Morning:
14°c
Hedge funds and other big investors were today told to expect even more delays before getting back the $16 billion (£10 billion) worth of assets they had tied up with the Lehman Brothers' London-based European business, after the Court of Appeal rejected one of the administrator's major repayment plans.
PricewaterhouseCoopers had asked judges for a scheme of arrangement - a legal device where fundholders give up their right to individual claims and allow PwC to divide the pot in the fairest way - to speed up the return of assets that Lehman had been holding in trusts for investors.
But the Court of Appeal confirmed a lower court's ruling that the investors were not creditors, since Lehman had only been holding their funds, and said it therefore had “no jurisdiction to sanction a scheme”.
PwC said it will have to switch to plan B: distributing the $16 billion that remains to be paid back from the original $30 billion pot without going through courts.
It warned this could lead to an extra three months' of delays as well as a blitz of lawsuits if individual parties sue each other to receive a bigger chunk of the assets.
About 900 European investment funds, including GLG, Ramius and Oceanwood Capital, will be affected by the ruling.
PwC's Steven Pearson said he was “disappointed” by the judgment.
