Billions of dollars locked inside Lehman Brothers' European arm can be returned to clients in the US and around the world, following a ruling by the UK Supreme Court.
It declared they had rights to reclaim the money, even though Lehman Europe had not kept it separate from the rest of the bankrupt firm's operations. Hedge funds feared they would have to take their place along with other unsecured creditors, recovering substantially less of their money, but yesterday's ruling puts them at the head of the queue.
Lawyers for Lehman creditors have been fighting ferociously over the remaining assets of the bank, which collapsed in September 2008, including $2.1bn (£1.3bn) held in segregated client accounts in Europe.
James Giddens, the trustee liquidating Lehman's US brokerage, welcomed the ruling.
"Property that should have been segregated for US customers of the failed broker-dealer belongs to those customers whether it was properly segregated or not," he said.
The ruling means more investors in the collapsed futures fund MF Global will get payouts, but the amount will be diluted.