Belfast Telegraph

Friday 19 September 2014

Lehman Brothers’ UK arm to claim for £100bn

Administrators of the UK arm of Lehman Brothers said they were preparing up to $100bn (£61.7bn) in claims against the US parent as the year anniversary of the bank's collapse nears.

PricewaterhouseCoopers (PwC) is working on the mammoth claims on behalf of more than 100 units that fell under London's remit, with the winding-up process gathering pace ahead of a looming deadline.

Lehman Brothers filed for bankruptcy protection on September 15 last year, tipping world markets into financial crisis and sparking a global recession. The move saw the US group cut ties with its subsidiaries, such as the UK-headquartered European arm, which left them taking creditor status of the US bank.

Administrators now have until September 22 to meet a deadline for claims, which could run into many hundreds of billions of dollars for creditors around the world.

PwC, which is acting as administrator of Lehman's UK and European operations, said the claims from the European business alone could run to $100bn, but were proving “exceptionally complex”.

They largely relate to past guarantees that the former bank pledged to its global subsidiaries, with many also demanding payment for work completed as part of the filing.

Lehman Brothers went bust owing $613bn (£378.5bn), but had about $639bn in assets.

There were also millions of so-called hung trades left frozen when it collapsed, which are adding to the complexity of the wind-up.

PwC said: “We're dealing with a large number of entities and therefore the claims could be as much as $100bn.

“These claims are exceptionally complex and we anticipate a large amount of further work in dealing with these claims.”

It added: “A significant number of claims arise as a result of guarantees issued by the parent company to its subsidiaries globally.

“We have invested a significant amount of time helping administrators in other affiliates understand the Lehman accounting systems so that we can all agree a standard approach to the reconciliation of inter-company balances.

“If this can be achieved then it should reduce the likelihood of affiliates suing each other in pursuit of amounts that are owed between the different Lehman estates.”

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