PwC aiming for £40bn return to Lehman creditors
Published at 12:30 PM on 15 September 2013
Five years on from the collapse of Lehman Brothers International Europe (LBIE), all creditors are a step closer to recovering 100% of their claims, with another significant payout to unsecured creditors expected in November, say administrators at PwC.
The March report to all creditors estimated a high-case outcome of 116.2p in the pound for unsecured creditors. The September report is expected to show an improvement on this, reflecting the further progress that has been made in the last six months. PwC is also planning the return of another £6bn of Trust Assets to clients later this month, bringing the total to £21bn since the start of the administration.
The prospect of achieving a 100% recovery for Unsecured, Trust Asset and Client Money creditors in any insolvent estate would be remarkable, but the prospect of doing it in the single, most complex company in the Lehman group is unprecedented and is testimony to the skill and effort
of the Lehman and PwC teams involved, working with the creditors committee, Linklaters and other legal advisers over the past five years.
Tony Lomas, joint administrator and PwC partner, said:
“In extremely unusual circumstances, a very successful working relationship has developed between all of these professionals in efforts to wind down one of the most complex insolvencies the financial world has ever seen. It is certainly the most complex I have ever worked on.
“We are some way from finishing the task but we have made a great deal of progress and have a clearer view of the future than ever before.
“For the past five years, the administrators and a large team of specialists from PwC have worked with 500 continuing Lehman staff and dozens of lawyers recovering assets, resolving claims and settling disputes with other group companies, in a quest to maximise recoveries for the company's creditors.
“We have already paid 68.5 p in the pound to LBIE's unsecured creditors and it looks likely that the eventual return will be 100p, plus the possibility of some interest. The exact amount of interest payable will depend on the outcome of an autumn UK High Court case which will decide whether unsecured creditors' rights to interest come before a £1.3bn debt claim filed by one of LBIE's shareholders, LBHI2.”
A total of 2,100 unsecured creditor claims totalling £9bn have now been admitted to the LBIE estate and another 1,300 claims worth £7.5bn have been filed but remain to be agreed.
Each of these outstanding claims is complex, many are disputed and some are likely to become the subject of litigation, PwC says.
The grand total eventually likely to be returned to creditors is expected to reach £40bn.
Tony Lomas, joint administrator and PwC partner, added:
“Given the sums involved and the huge complexity of the task, we are extremely pleased with the progress that we have made, and with our prospects of breaking the back of many of the remaining big issues over the next year or so. The results to date speak for themselves, and PwC takes great pride in leading such a hard-working and expert team that has recovered so much value for the company's creditors.
“On the regulatory side in the UK alone, significant legal changes have been made to reflect the lessons learned from the Lehman collapse. A Special Administration regime has been introduced for investment firms, special resolution provisions have been added to the Banking Act and Recovery and Resolution Plans will soon be required of all major banks, in the hope that these will help prevent future bank collapses, or at least reduce the market turmoil if collapse is inevitable.”
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 184,000 people in 157 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.