Lehman International creditors might be repaid in full, says PwC

Some $20.9 bn worth of assets, including cash and securities, have been returned to former clients

Creditors to Lehman Brothers International Europe (LBIE) might be fully repaid after administrators settled disputes with some of the failed investment bank's affiliates, increasing the size of expected future recoveries. A recent agreement with a Lehman affiliate has freed an additional $9.1 billion of assets, which will be distributed later this year, according to an emailed statement from PriceWaterhouseCoopers LLP (PwC). LBIE is planning a second dividend to unsecured creditors, as well as a first distribution to client money claimants this month.

"To be able to advise ordinary unsecured creditors that we now have a reasonable chance of eventually repaying their claims in full, marks a significant milestone," Tony Lomas, lead administrator at PwC, said in the statement. "We do expect to pay a second, significant dividend to creditors in the near future, taking us another step towards this new target."

The administrators have already returned £13.6 billion ($20.9 billion) in cash and securities to clients with funds deposited at the defunct brokerage, PwC said in the statement. Lehman International made its first interim distribution to unsecured creditors in November, paying 25.2 pence on the pound, or about £7 billion, for 1,582 claims, PwC said at the time.

Lehman failed in September 2008, filing the biggest bankruptcy in US history, because of too much debt and risky real estate investments, according to an examiner's report. The former bank is still liquidating and trying to cut claims more than four years after its collapse.

Claims on affiliates
Lehman's claims on affiliates, and amounts owed to them, are among its largest single class of claims. Last year it said it was owed $45.2 billion by affiliates, including its defunct brokerage Lehman Brothers Inc and Swiss affiliate Lehman Brothers Finance AG, both of which it has settled this year.

The estate of LBIE is preparing to make an initial $340 million payment to its clients, equivalent to 20 cents on the dollar of $1.7 billion of claims held in a central client pool, the Sunday Telegraph said yesterday citing an administrator report. Unsecured creditors will receive at least 2.8 billion pounds over three payments this year, equivalent to more than 10 pence on the pound of claims, the newspaper said.