Councils join in fight to liquidate Lehman Bros
Local councils have launched another legal battle against Lehman Brothers Australia, with an application to terminate a deed of company arrangement (DOCA) before the Federal Court.
The action comes after the councils were deemed “contingent creditors” under the DOCA and offered between 2-13 cents in the dollar while related-party creditors will receive between 47.8-100 cents in the dollar.
Litigation funder IMF has also hopped on board, and is representing WA’s Swan Council, NSW shires Parkes and Wingecarribee, and other unnamed councils as they try to have it put into liquidation. All the councils invested with the collapsed bank.
IMF Executive Director John Walker told insuranceNEWS.com.au the DOCA creates unfair prejudice against the contingent creditors, who include charities, churches, universities and others who bought into the collateral debt obligations market.
“It’s my view that it’s in their best interest not to receive money under the DOCA but to have the assets distributed under the Corporations Act with Lehmans in liquidation,” he said. “We think they’ll get more from a liquidation.”
Mr Walker says after the first directions hearing last Friday, the application will be back before the court around July 3 for the granting of a hearing date. The hearing is expected to start in late July or early August.
The action comes after the councils were deemed “contingent creditors” under the DOCA and offered between 2-13 cents in the dollar while related-party creditors will receive between 47.8-100 cents in the dollar.
Litigation funder IMF has also hopped on board, and is representing WA’s Swan Council, NSW shires Parkes and Wingecarribee, and other unnamed councils as they try to have it put into liquidation. All the councils invested with the collapsed bank.
IMF Executive Director John Walker told insuranceNEWS.com.au the DOCA creates unfair prejudice against the contingent creditors, who include charities, churches, universities and others who bought into the collateral debt obligations market.
“It’s my view that it’s in their best interest not to receive money under the DOCA but to have the assets distributed under the Corporations Act with Lehmans in liquidation,” he said. “We think they’ll get more from a liquidation.”
Mr Walker says after the first directions hearing last Friday, the application will be back before the court around July 3 for the granting of a hearing date. The hearing is expected to start in late July or early August.