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The Court of Appeal’s approach in Burlington v Lomas (part of the Lehman Waterfall litigation) to the entitlement to surplus and calculating the statutory interest due to creditors on the debts of a company in administration is examined by Robert Amey, of South Square.
Burlington Loan Management Ltd and others v Lomas and others  EWCA Civ 1462
The Court of Appeal dismissed the appeals of the representative creditors of Lehman Brothers International Europe (LBIE) on various issues regarding the amount of statutory interest they should receive on what LBIE had owed them when it went into administration.
When LBIE entered administration on 15 September 2008, it was thought to be insolvent by nearly all concerned. As it turned out, after paying all debts and administration expenses in full, there remained a surplus estimated at around £7.39bn.
The administrators of LBIE therefore applied to the court for directions as to how to distribute the surplus, and a number of representative creditors were joined to the proceedings to present the arguments in favour of their class receiving the greatest possible share. These proceedings were known as the Waterfall proceedings, since they concerned the appropriate payment waterfall out of the estate.
The first of these applications, known as Waterfall I, was determined by the Supreme Court in May 2017 (see The Joint Administrators of LB Holdings Intermediate 2 Ltd v The Joint Administrators of Lehman Brothers International (Europe)  UKSC 38,  All ER (D) 102 (May)). The second application, known as Waterfall II, was divided into three tranches (A, B and C). The latest judgment contains the Court of Appeal’s conclusions on parts A and B of Waterfall II (as well as a single issue which had previously been determined within part C, but which more naturally fell to be considered along
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