Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Does the recent decision in Lehmans clarify the ranking of creditors and shareholders' claims (ie waterfall of payments) where there is a surplus of monies available for distribution?
In the matter of Lehman Brothers International (Europe) (in administration) (LBIE) and Lehman Brothers Limited (in administration) (LBL) and LB Holdings Intermediate 2 Limited (in administration) (LBHI2) Mr Justice David Richards announced on 21 February 2014 his decision in the Lehman waterfall application, which addressed a number of issues arising from the likelihood of a surplus in the estate of Lehman Brothers International (Europe) after payment of all proved debts.
What did the court decide?
David Richards J has issued a statement of conclusions stating that:
• LBIE's shareholders (LBHI2 and LBL) have a very wide obligation to contribute on liquidation under the Insolvency Act 1986, s 74(1) (IA 1986) as LBIE is an unlimited company—the shareholders must contribute to:
◦ proved debts
◦ statutory interest on the proved debts
◦ un-proved liabilities
• the (i) contributory rule (that a contributory can't recover anything until he has fully paid any obligations as contributory) and (ii) equitable rule in Cherry v Boultbee do not apply in administration (only liquidation)
• LBIE can lodge a proof of claim in the distributing administration or liquidation of either of its shareholders, LBL or LBHI2 claiming those contingent liabilities under IA 1986, s 74(1) which may arise if LBIE went into liquidation, however the mandatory rules of set-off would apply
• creditors (whose contractual or other claims are denominated in a foreign currency) which suffered a loss due to currency movements between the date of commencement of the administration and the date of payment can claim that loss, but only as an unprovable debt (payable after all proved debts and statutory interest)
• if the administration of LBIE is immediately followed by a liquidation, interest falling in the period of the administration which has not been paid before the liquidation commences will not be provable as a debt in the liquidation nor as statutory interest—however, creditors whose contracts/judgments specify an interest rate (often higher than the sta
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234