BusinessBusiness RecoveryAdministrators could pay back Lehman creditors by 2011

Administrators could pay back Lehman creditors by 2011

A new "Consensual Approach" proposal by PwC administrators at Lehman Brothers UK arm, could save creditors time and money if they are willing to accept a lower valuation on assets

PwC administrators to Lehman Brothers International Europe (LBIE) could repay
creditors as early as next year if creditors are willing to accept lower
valuations.

The latest announcement by the administrators is part of the “consensual
approach” proposal which will also determine the value owed to creditors and how
the estimated $22bn (£14.8bn) of assets at LBIE will be divided.

The consensual approach could enable joint administrators to agree the
majority of value to unsecured creditor claims by the end of the year and
distribute the first payments in 2011.

According to Steve Pearson, joint administrator and partner at PwC, the
conventional process could rack up costs and take years before any payments are
made.

Currently there are an estimated 6,500 creditors and assessing each claim
could take until 2013.

Pearson said: “The consensual approach is an innovative mechanism which will
enable the claims to be determined in an expeditious manner, resulting in
significant time and cost savings to both unsecured creditors and LBIE.

“Further, the timing at which cash distributions can be made will be
accelerated materially.”

Administrators are currently speaking with creditors including the creditor
committee, as they need an “overwhelming majority” creditor backing for the
consensual approach to go ahead.

If the administrators receive the backing needed to approve the proposal they
hope it can be launched in autumn this year.

Tony Lomas, Steven Pearson, Dan Schwarzmann, Mike Jervis and Derek Howell,
were appointed joint administrators to LBIE on 15 September 2008.

Earlier this week the Accounting & Actuarial Discipline Board said it
would investigate the conduct of Ernst & Young members in the audit of
Lehman Brothers UK arm LBIE, with the Big Four firm saying it would cooperate
fully.

Further reading:

Watchdog
opens investigation of E&Y over Lehman

Lehman
Brothers to sue JPMorgan Chase

Lehman
investigation blocked by US-EU regulator stand-off

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