Creditors agree to ‘disappointing’ Lehman Bros deed
Local councils that invested millions with Lehman Brothers Australia will receive between 2-13 cents in the dollar for losses they incurred after creditors last week agreed to a plan that repays them more.
NSW’s Wingecarribee Shire Council has been locked in a court battle with the investment bank, arguing it engaged in misleading and deceptive conduct.
But last week Federal Court judges upheld an appeal by the bank’s administrators to deny the council access to insurance documents.
Council GM Mike Hyde told insuranceNEWS.com.au he is “bitterly disappointed” about losing the verdict. Creditors voted last Thursday in favour of a deed of company arrangement (DOCA) proposed by Lehman Asia – Lehman Australia’s largest creditor – that the administrators hope will bring litigation to an end.
The councils had wanted the company placed in liquidation because they believe it would lead to a better outcome as they fight for $626 million they are owed. The deed sets aside just $43.5 million.
Wingecarribee’s legal representatives Piper Alderman says the councils were placed in an “impossible position” after having just a few hours to consider the revised terms and their impact on financial returns.
“The revised DOCA reduced some councils’ expected return from 5.5 cents in the dollar under the previously proposed DOCA to 2.4 cents,” the firm said.
Adopting the deed means creditors will be repaid 100 cents in the dollar in a matter of just months, rather than the years it can take to settle legal action. Meanwhile, 18 former executives of the Australian arm are reportedly lining up ahead of the other creditors to collect $10.9 million in bonuses, benefits and loans.
NSW’s Wingecarribee Shire Council has been locked in a court battle with the investment bank, arguing it engaged in misleading and deceptive conduct.
But last week Federal Court judges upheld an appeal by the bank’s administrators to deny the council access to insurance documents.
Council GM Mike Hyde told insuranceNEWS.com.au he is “bitterly disappointed” about losing the verdict. Creditors voted last Thursday in favour of a deed of company arrangement (DOCA) proposed by Lehman Asia – Lehman Australia’s largest creditor – that the administrators hope will bring litigation to an end.
The councils had wanted the company placed in liquidation because they believe it would lead to a better outcome as they fight for $626 million they are owed. The deed sets aside just $43.5 million.
Wingecarribee’s legal representatives Piper Alderman says the councils were placed in an “impossible position” after having just a few hours to consider the revised terms and their impact on financial returns.
“The revised DOCA reduced some councils’ expected return from 5.5 cents in the dollar under the previously proposed DOCA to 2.4 cents,” the firm said.
Adopting the deed means creditors will be repaid 100 cents in the dollar in a matter of just months, rather than the years it can take to settle legal action. Meanwhile, 18 former executives of the Australian arm are reportedly lining up ahead of the other creditors to collect $10.9 million in bonuses, benefits and loans.