Lehman seeks appeal of ruling that increases payment to Deutsche Bank

(Bloomberg) – Lehman Brothers Holdings Inc., parent company of the company that went bankrupt during the 2008 financial crisis, is seeking to overturn a UK decision that would reduce collections for its creditors.

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LBHI and another unit of the lender are asking the UK’s highest court to review an October ruling that pushed the parent company further in the race to be reimbursed in a UK-based insolvency proceeding. UK. There are still hundreds of millions of dollars at stake.

The lower court ruled that the subordinated debt known as “capital reinforced preferred securities” must be paid before other lower ranking creditors, including LBHI, which could give ECAPS holders a boon of 500 million pounds, or roughly $ 665 million. Deutsche Bank AG has the largest stake and other investors include Barclays Plc, Farallon Capital Management and CarVal Investors.

LBHI argued the court erred in some of its rulings and said the ruling could have a significant effect on the London subordinated debt market, according to court documents filed Thursday.

ECAPS issued in the years leading up to Lehman’s demise strengthened the regulatory capital of the investment bank. After New York-based Lehman went bankrupt, the securities traded for pennies against the dollar, and some were even given away for free. However, the October court ruling left open the possibility that holders could be paid at full face value.

There will likely not be enough money to fully reimburse LBHI and ECAPS holders, making the redemption order crucial for investors.

LBHI’s lawyers “have not identified any questionable point of law of public importance which merits consideration by the Supreme Court,” Deutsche Bank argued in an objection to the appeal request. “Accordingly, leave to appeal should be refused.”

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