Lehman Brothers Hedge Funds
Court Rules in Favor of Hedge Funds in Lehman Case
A UK Court of Appeals has ruled in favor of hedge funds on their money held in Lehman Brothers. The court said that several hedge funds were correct in arguing that their clients' money was not properly protected when the investment bank fell.
The development is the latest aspect of the complex effort to return cash and other assets to Lehman's clients after the bank failed in September 2008. Lehman's bankruptcy, with more than $600 billion in total assets, ranks as the largest U.S. corporate failure.
The European arm had segregated, or ring-fenced, a pool of as much as about $2.1 billion of money for some hedge-fund clients, thus providing protection in the event of bankruptcy. But, for various reasons, the bank failed to ring-fence potentially billions of dollars of additional money for other clients who also believed their money was segregated. Those clients have argued that they should be treated equally; administrators of Lehman's U.K. estate, PricewaterhouseCoopers, sought direction on how to handle the matter.
In December, a U.K. High Court judge ruled against those clients, saying they wouldn't be entitled to the same protection for their money, effectively leaving them as unsecured creditors in the U.K. insolvency case. But three appeals court judges overturned that decision Monday. Source
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