Creditors of Lehman Brothers International Europe, the U.K. arm
of collapsed investment bank Lehman Brothers Holdings Inc., were
paid $7.8 billion this week, more than five years after the bank's
failure helped spark the global financial crisis.
Russell Downs, who's overseeing Lehman's U.K. administration for
PricewaterhouseCoopers, said the distribution represents a full
return to the U.K. unit's creditors, mostly hedge funds whose
trades got caught up in Lehman's bankruptcy.
The payout comes about three months after the U.K. unit's
creditors approved a $38 billion settlement with the estate of
Lehman Brothers Inc., the investment bank's U.S. brokerage
business.
The distribution "marks the end of a very long campaign that
started within weeks of the administration when our original claim
on behalf of our clients was filed against Lehman Brothers Inc., "
said Mr. Downs in a statement.
Thursday's $7.8 billion payout to the so-called omnibus trust
creditors is in addition to an earlier payment of about $22 billion
plus another $9.5 billion doled out to the U.K. unit's unsecured
creditors. The administrator eventually hopes to return about $64.5
billion to the U.K. arm's creditors.
Lehman's Chapter 11 filing in September 2008 triggered foreign
bankruptcy proceedings for more than 80 of the bank's far-flung
affiliates.
Lehman's holding company has reached settlements on intercompany
claims with virtually all of its foreign affiliates, including
those in the U.K., Japan, Switzerland and Hong Kong, as well as the
liquidators of its U.S. broker-dealer.
Some 110,000 individual retail customers of Lehman's U.S.
broker-dealer have also received all their money back, $92.3
billion in all.
That unit is being wound down by James Giddens in accordance
with the Securities Investor Protection Act. Mr. Giddens and his
U.K. counterparts settled their $38 billion dispute last fall.
The bulk of the Lehman U.S. customer accounts, with assets of
more than $40 billion, were transferred to Barclays PLC (BCS) after
the banks struck a deal in the days following Lehman's bankruptcy
filing.
As for Lehman Brothers Holdings' creditors, since its Chapter 11
plan became effective in early 2012, creditors of Lehman's estate
have been paid back nearly $50 billion. That number is expected to
grow to more than $80 billion, Lehman said earlier this summer.
The holding company officially exited Chapter 11 protection in
March of last year, but the remains of the company still exist in
the billions of dollars in assets being overseen by a new board of
directors.
The team of professionals helping with the holding company's
liquidation has raked in $197.7 million since Lehman's official
exit from Chapter 11, according to a bankruptcy court filing
Thursday.
The case is expected to continue for several more years as the
team sells off Lehman's remaining real estate and private equity
holdings and unwinds its derivative positions.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to )
--Joseph Checkler contributed to this article.
-Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
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