Lehman Brothers brokerage settles with Hong Kong branch
Failed brokerage's trustee finally resolves claims worth hundreds of millions of dollars
The trustee liquidating Lehman Brothers has reached a settlement with the brokerage's Hong Kong affiliates, resolving hundreds of millions in claims and recovering assets worth about US$71 million for distribution to creditors.
The agreement reached with the Hong Kong entities by James Giddens, the trustee appointed under the Securities Investor Protection Act to wind down the brokerage, was reported in court documents filed on July 11 in United States Bankruptcy Court in New York.
The Hong Kong entities claimed they were owed about US$405 million, while Giddens asserted US$411 million in claims against them, according to court papers.
Under the accord, which requires approval by both the US bankruptcy court and the court in Hong Kong, Giddens will recover assets with a value of approximately US$71 million, comprising two allowed trust claims in the amounts of US$69 million and HK$4 million against the Hong Kong entities and the return of five securities, according to court papers.
The US Lehman brokerage would also get six allowed non-trust claims against the Hong Kong entities aggregating about US$16 million, while the Hong Kong entities would get six approved general unsecured claims aggregating about US$233 million.
The settlement resolves the Hong Kong entities' customer and general creditor claims with finality, avoids costly litigation in Hong Kong and reduces the reserves the US brokerage must maintain for disputed customer claims.