The sight of Lehman Brothers’ employees leaving the office with cardboard boxes in their arms arguably marked the beginning of the 2008 financial crisis. However, as a Court of Appeal ruling made plain, the bank’s European branch did not go bust and, thanks to the tireless work of insolvency professionals, a multi-billion-pound surplus became available for distribution to both secured and unsecured creditors.
Lehman Brothers International (Europe) went into administration at the height of the crisis and almost all concerned considered it to be insolvent. As it turned out, however, a surplus estimated at £7.93 billion remained after all the debts proved in the administration, together with expenses, were paid in full.
A mass of litigation followed the bank’s collapse in respect of the proper distribution of that surplus. However, issues remained as to the entitlement to interest on billions of pounds owed to unsecured and subordinated creditors in respect of periods after the beginning of the administration. The Court’s definitive ruling on those issues is expected to be one of the final chapters in the legal saga.