PwC Lehman administrators to return 100% plus interest to creditors

PWC ADMINISTRATORS have announced they will return 100% of dividends to creditors of collapsed investment bank Lehman Brothers International Europe (LBIE), this year.

The latest announcement of returns is incredibly rare, most unsecured creditors, such as the taxman and suppliers, usually receive just 1p -25p for every £1 owed.

In a further coup for the administrators, this is one of the first time’s unsecured creditors are likely to receive interest on the debt they are owed.

The administrators said that £5bn in surplus has been recovered and that they hope to make further payments above the 100% to unsecured creditors soon.

Tony Lomas, lead PwC administrator and partner said: “The full repayment represents a remarkable feat, following the collapse of the Lehman group in September 2008.

“The fact that we have been able to pay ordinary unsecured creditors in full, including the return of their Trust Assets and client money, with a significant surplus remaining, highlights the importance of having a healthy level of capital within a firm’s balance sheet.”

However, the administrators also announced they are unable to distribute funds due to ongoing legal disputes over which parties should be paid first. The administrators are due to put together a “consensual solution proposal” which outlines the order of payment as they see fit. They hope the proposal will be agreed and payments can begin being made this year.

According to the most recent creditor report, in September 2013, the PwC fees were 2.3% of assets realised, approximately £714m for the five years they have been in place so far.

The original PwC partners appointed to LBIE in September 2008 were Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis.

There are between £14.7bn and £47.9bn of unsecured claims against the collapsed investment bank. 

Three years ago administrators made a return to creditors with interest following the collapse of a pharmaceutical company Unigreg. 

Insolvency practitioners from Neivlle & Co, rescued Unigreg through a sale in mid-2011 paying all creditors in full with interest. The company had about £5.2m in debts. 

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