Litigation heavyweights act on Lehman Brothers administration costs battle
25 April 2018
Litigation heavyweights act on Lehman Brothers administration costs battle
Freshfields Bruckhaus Deringer,
Linklaters,
Cleary Gottlieb Steen & Hamilton and
Kirkland & Ellis are among the firms to have advised on a legal costs dispute between creditors of the Lehman Brothers International collapse.
The full line-up of law firms includes Ropes & Gray, Morrison & Foerster and Michelmores.
Lehman Brothers creditor Wentworth Sons argued that all of the other respondents should be entitled to recoup legal costs from a previous 2016 trial, which identified the issues for creditors deriving from the 2008 collapse.
Wentworth opposed Burlington Loan Management, CVI, Hutchinson Investors and Goldman Sachs’ applications to recover costs from the administration estate, saying that the previous trial counted as “adversarial litigation”.
This is the closing judgment relating to the Waterfall II application, which focused on debts during the administration of the principal trading company for the European operations of the Lehman Brothers Group.
Within his judgment, Mr Justice Hildyard ruled in favour of Wentworth. He stated: “The SCG [Burlington Loan Management, CVI and Hutchinson Investors], which notwithstanding any amorphous expectation must have known that there was nevertheless a costs risk, should pay costs accordingly.”
The Waterfall II insolvency judgment of 2016 stated that there were 854 creditors holding a valid claim in LBIE’s administration, representing approximately £4.4bn of LBIE’s total admitted claims. The administrators estimated that some 543 of these claims arise under English law; and some 310 under New York law.
At the time, Mr Justice Hildyard stated that the statutory interest payable in respect of ISDA claims would be approximately £1.7bn, accruing from 13 September 2008.
“By way of illustration, if claims to interest at (say) 8 per cent or 12 per cent compound were admitted, the entitlement would rise to about £2.1bn or £3.7bn respectively; and at 18 per cent compound the amount would rise to some £6.8bn,” he said.
The legal lineup
For the claimants, the joint administrators of Lehman Brothers International
South Square’s Daniel Bayfield QC, instructed by Linklaters partner Patrick Robinson
For the respondents, Burlington Loan Management, CVI GVF, Hutchinson Investors
South Square’s Robin Dicker QC and Henry Phillips, instructed by Freshfields Bruckhaus Deringer partners Ken Baird and Christopher Robinson for CVI; Ropes & Gray partner Tony Harspool for Hutchinson; and Sonya Van de Graaff at Morrison & Foerster for Burlington
For the fourth respondent, Wentworth Sons Sub-debt
South Square’s Antony Zacaroli QC, David Allison QC and Adam Al-Attar, instructed by Kirkland & Ellis Kon Asimacopoulos
For the fifth respondent, York Global Finance
South Square Robert Amey, instructed by Michelmores Charles Maunder
For the sixth respondent, Goldman Sachs International
Essex Court Chambers’ David Foxton QC and Brick Court Chambers’ Craig Morrison, instructed by Cleary Gottlieb Steen & Hamilton
