Lehman Brothers’ British creditors could receive recoveries taking their final payout to well in excess of 100 per cent of their money back within the next two years.
In what has been described by liquidators as “the single biggest, most complex and demanding case” they have ever dealt with, most of the biggest issues are likely to have been resolved in a year or two, although there will likely be disputes for years after.
Another “significant payment” is expected next month to leave creditors in an extraordinary position, with anything like full recovery from any liquidation rare, let alone one as complex as Lehmans.
A March report to all creditors estimated a high-case outcome of 116.2p in the pound for unsecured creditors. However, the September report is expected to show an improvement on this, reflecting further progress over the past half year. Liquidators from PricewaterhouseCoopers are also planning the return of another £6bn of trust assets to clients later this month. It brings the total to £21bn since the start of the Lehmans administration.
Some creditors made enormous profits from the liquidation, with the debt trading at little more than 30p in the pound at points after the bank went bankrupt. It now trades at a premium.
Around 2,100 unsecured creditor claims totalling £9bn have been admitted to the estate and another 1,300 worth £7.5bn have been filed but remain to be agreed. The final total return is now estimated to reach £40bn.
Tony Lomas, one of the chief liquidators, said he didn’t expect to see another case like it.
“The last five years have been littered with disputes over huge amounts of money, both with the trustees of other group companies that failed at the same time, and with street counter-parties,” he said. “For a bankrupt company to be able to repay its creditors in full is the exception to the rule, and for us to achieve that on the scale of Lehman is extraordinary to say the least.
“We have another year or two of continuing intense activity before we break the back of the biggest issues, but beyond that it will likely take many more years to resolve the final, lingering disputes.”