In another judicial decision springing from Lehman Brothers, as a result of the likely surplus in the estate of Lehman Brothers International (Europe) (in administration) (LBIE) after all the provable debts have been paid, Mr Justice Richards has issued a ‘statement of conclusions’ in what is called the Waterfall Application. A more detailed judgement is expected in late March 2014. We summarise the conclusions below.

Ranking and Contributions of Shareholders of Inlimited Companies -

LBIE’s shareholders (Lehman Brothers Limited (LBL) and LB Holdings Intermediate Limited (LBHI) both are in administration) have substantial unsecured claims against LBIE. One of the issues for consideration was whether the claims of LBL and LBHI were subordinated to the claims of the creditors of LBIE to be paid post-administration statutory interest. David Richards J concluded that the unsecured claims of LBIE’s shareholders were subordinated not only to provable debts but also to statutory interest and liabilities that can’t be ‘proved’ in the insolvency. This decision is welcome news to ordinary unsecured creditors of LBIE as their recoveries will not be diluted by the claims of LBL and LBHI.