London court blocks move to claim Lehman assets

By Reuters Staff
August 21, 2009

LONDON, Aug 21 (Reuters) – Clients of Lehman Brothers in Europe may have to wait longer to get their assets back after a judge blocked a move to speed the unwinding of the bankruptcy, accountants warned on Friday.

PricewaterhouseCoopers (PwC), administrators to Lehman Brothers International (Europe) (LBIE), had asked the High Court to approve a plan to accelerate the return of client’s assets, tied up in the bank since its collapse last year.

But the UK High Court said it had no jurisdiction to sanction the so-called scheme of arrangement, said PwC, to allow it to return $9 billion of client assets from the first quarter of 2010.

The proposal was opposed by the London Investment Banking Association (LIBA). The trade body, through its lawyers, said it supports the return of Lehman assets but was worried the scheme could weaken the protections on client assets held in custody by banks.

PwC said in a statement the judgement was disappointing and could create fresh delays for many clients.

Lehman’s demise in September brought the global financial system to the brink of collapse and accountants and lawyers expect to have to work for years to sort out billions of dollars worth of assets left locked in its accounts.

With the scheme of arrangement — a court-approved change to agreements — PwC had sought to speed up the process, having warned it could take “some years” to do the job in the absence of such a scheme.

Of the $30 billion of assets held by LBIE in September 2008, some $13 billion had already been returned in the past nine months, PwC said, adding it would continue to work on bilateral negotiations to clinch such deals.

PwC said it was considering an appeal.

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