PwC readies report on Lehman wind-down

PricewaterhouseCoopers is set to lift the lid on its efforts to claw back assets for creditors of Lehman Brothers European arm, the investment bank which had a balance sheet topping £1.1trillion.

Details of the report, which will include its fees for the last six months, were still being finalised as Accountancy Age went to press. The report had been due on 15 March but the administrators are understood to have a grace period beyond that date. It will describe the progress the UK’s largest corporate recovery firm has made in winding up the affairs of the collapsed bank.

Creditors have already signed off on PwC’s fees for its opening stint, which are thought to have topped £50m for the first 14 weeks alone, but the report will represent a key milestone for investors.

Lehman Brothers International Europe has a balance sheet of positions ‘well north’ of a trillion dollars, the administrators said, but efforts to provide a breakdown of their assets and liabilities were hampered as they waited on counterparties to work out their positions.

One of the major hurdles PwC faced was settling all the outstanding, or ‘hung’, trades that had been left in limbo when LBIE fell foul of its parent’s collapse in the US.

In the US, the Federal Reserve and the SEC moved to ring-fence Lehman Brothers International, allowing the American division to complete its outstanding trades, but no such move was taken in the UK.

Ring-fencing Lehman Brothers Europe’s outstanding trades would have made the start of the job, which was racking up bills of £4m a week, ‘an awful lot easier’, Lomas previously told Accountancy Age.

The European positions were frozen, which meant the administrators had tens of thousands of trades to clear before they could proceed. The administrators also had to deal with costly litigation.

Last year four US investment funds said they may face collapse because they were unable to access information about assets trapped in the Lehman administration.

The High Court dismissed a claim against PwC by the four funds, The judge said he was ‘sympathetic’ to the plight of the applicants and to others who had assets locked up in Lehman Europe, but added the administrator must be accorded a wide measure of latitude’.