Lehman Europe, Lehman Brothers Finance settle financial arrangements

By Caroline Salls

Pittsburgh, Feb. 22 - Lehman Brothers International (Europe)'s (LBIE) joint administrators have signed a settlement deed with Lehman Brothers Finance AG that settles substantially all of the financial arrangements between the parties, according to a news release.

The administrators said the relationship between LBIE and Lehman Brothers Finance is one of the most complex and significant affiliate relationships covering securities settlement and custody, secured financing, OTC/Exchange Traded derivatives and Prime Broker.

"The settlement has considerable benefits for LBIE as we continue to firm up plans for the 2013 distributions to our unsecured creditors and client money claimants," joint administrator Tony Lomas said in the release.

According to the release, the terms of the agreement include the following:

• A $200 million cash payment to Lehman Brothers Finance on deal approval;

• $450 million of assets and asset proceeds will be retained by LBIE, with the $650 million balance to be returned to Lehman Brothers Finance, subject to a potential realization adjustment and to resolution of extended liens;

• Assignment of any potential Lehman Brothers Finance client money claim to LBIE's nominee;

• Conclusion of back-to-back side letter litigation; and

• Granting of immediate mutual temporary reserving agreements.

The agreement is subject to the finalization of Swiss approval processes applicable to both parties. The administrators said further details of the settlement will be posted as part of the approval process.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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