The ruling will see a number of hedge funds gain access to a $2.1bn (£1.3bn) pool of cash, which was segregated by the stricken bank before it collapsed in the largest US corporate failure ever, after they argued to the appeals court that the cash they had in Lehman Brothers should also have been protected in the same manner.
In December the High Court had ruled against these creditors and said they wouldn’t be entitled to the funds.
The new judgment means that all clients who should have had money set aside for them before Lehman collapsed with more than $600bn in assets can share in the client money pool – regardless of whether the investment bank ringfenced it.
“This is important for investor confidence in the UK as there was concern that previous judgments left a gaping hole in UK investor protection,” said Robert Turner, a lawyer at Simmons & Simmons.
Lehman’s lead administrator Tony Lomas at PricewaterhouseCoopers will now have to decide how the pot should be split.
However, other former Lehman clients who thought they had this pot of money to themselves will now have to share it.
They are considering appealing this ruling.
THE 2008 fall of Lehman Brothers has raised Tony Lomas’ already distinguished career up a few notches.
The PricewaterhouseCoopers (PwC) chairman of business recovery services was already a well known name before he was tasked with one of the most complex administrations of the decade.
Lomas, who made a partner at PwC in 1990, was handed the mammoth job of sorting through the stricken bank’s European dealings almost two years ago when news of Lehman’s collapse sent shockwaves across the Atlantic.
On top of sifting through Lehman’s accounts, Lomas is also leading the administration of Enron’s European operations and the fall of MG Rover Group’s production facilities.
Lomas, who has spent the majority of his career advising on the restructuring and administration of large companies.
Previous work for Lomas includes giving restructuring advice to banks and bond debt groups across a number of industry sectors. It is likely that the Lehman administration will keep Lomas busy for the next decade.