Lehman Prime Brokerage Settlement Nixed, Freeze Could Stretch Years

Aug 25 2009 | 12:08pm ET

A British court has rejected a proposed settlement that could have allowed some of Lehman Brother’s European prime brokerage customers to get their money back.

Justice William Blackburne of the London High Court ruled the court did not have the jurisdiction to force dissidents to accept the plan offered by PricewaterhouseCoopers, the administrator for Lehman Brothers International Europe. PwC had asked the court to block any creditor claims after this year.

“This judgment is disappointing, as it could create further delay for many of LBIE’s clients,” Steven Pearson, joint administrator of LBIE, said after the ruling. He warned that it could mean that the hedge fund assets and those of Lehman’s creditors could be tied up for years.

Last month, PwC proposed a plan which could have unfrozen some of the $11 billion from 700 hedge funds that remains tied up in the Lehman bankruptcy proceedings.

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