Linklaters and Davis Polk & Wardwell have won a settlement agreement in the long-running Lehman Brothers bankruptcy that ‘unlocks’ $9bn of assets and sees them returned to the bank’s customers.
Linklaters acted for administrators PwC, an instruction the firm has enjoyed since Lehman collapsed in 2008, on all English law matters.
The Magic Circle firm has fielded a large team acting for PwC, including restructuring partners David Ereira, Tony Bugg and Richard Holden in London and litigation partner James Warnot in New York.
Davis Polk was also involved in the settlement, with the firm working alongside Linklaters in New York, under the lead of bankruptcy partner Timothy Graulich and litigation partner Elliot Moskowitz.
This was a complex task involving inter-company claims and liabilities between Lehman Brothers International Europe (LBIE) and Lehman Brothers Inc (LBI). Other firms to land roles on this matter include New York-based Hughes Hubbard & Reed, and Norton Rose advised LBI on both sides of the Atlantic.
Restructuring partner Hamish Anderson took the lead for Norton Rose on all UK-related matters, while restructuring partner James Kobak Jr led a team for Hughes Hubbard.
Linklaters’ Bugg, global head of restructuring and insolvency, described this as ‘an enormous piece of work’. The settlement agreements provide a final resolution of all legal and factual issues regarding inter-company relationships between LBI and LBIE.
‘This could have gone on for years on appeal. This settlement represents a huge milestone both for LBIE and for the US broker dealer who was able to transfer substantial accounts in the first few weeks of the case but couldn’t continue because of inter-company disputes,’ said Linklaters’ Graulich.
Lawyers involved in the case seemed thankful for avoiding court. ‘The degree of litigation that had already taken place showed that it would be exceedingly complex in front of a court,’ said Moskowitz.
The settlement will be made up of $8.4bn in cash and securities and post-filing income of around $600m. It may signal that the long running Lehman saga is finally drawing to a close.
Commenting on the Lehman settlement, Clifford Chance restructuring partner Philip Hertz said: ‘To quote Churchill – it’s the beginning of the end. A landmark for the LBIE administrators who have been in it for the long haul. Protracted litigation would not have benefited the companies concerned or their creditors so to have reached a settlement was really important, albeit I am sure there is probably still lots left to do to bring the estate to a close.’