AFTER many years of being involved in a legal battle Moree Plains Shire Council (MPSC) may soon receive 80 cents in the dollar on their $2.5 million claim against an investment gone bad with the Lehman Brothers.
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The history making legal battle will see $500 million dollars released to creditors when settlement between the liquidators of Lehman Bros Australia and Lehman Bros United States (US) is approved.
MPSC mayor, Katrina Humphries, said council was directed by the government to invest in collateralised debt obligations.
“We are prepared to move heaven and earth,” she said.
“We’ve had to try and untangle the web to make sure this doesn’t happen again. I am proud of the team at MPSC that have dogidly taken all avenues to track and retrieve our money.”
“As disclosed in our Annual Reports and Financial Statements over the past few financial years, MPSC, together with community groups and other local government authorities, has been involved in proceedings being taken against Lehman Brothers Australia in relation to losses arising out of investment instruments acquired by them prior to the global financial crisis.” MPSC said in their statement.
“Council understands that Federal Court judge Steven Rares approved a settlement between PPD Advisory and its US parent late last year approving the release of funds to creditors. MPSC’s portion of any financial settlement is not yet finalised but Council welcomes the news that a financial settlement is likely to be forthcoming.”
PPB Advisory chairman, Stephen Parbery, said when the Lehman Bros US collapsed in 2008 it was the largest collapse in US history, and the world.
PPB Advisory liquidator, Marcus Ayers, said PPB is confident MPSC will see a return.
“80 cents in the dollar is a pretty substantial return considering where we were at seven years ago,” he said.
Mr Ayres said most disputes against the Lehman Brothers had been resolved and he was hoping that by May all creditors would be paid out.
Mr Parbery explained the US has very different liquidation laws than Australia, and these laws were less protective of investors.
“In Australia the laws (Corporation Act) deal with creditors claims. These claims were made by council’s and other parties who primarily said they had been misinformed, therefore we have a claim,” he said.
PPB Advisory brought the court battle to Australia, knowing if they hadn’t they would be waiting for the matter to resolve for years.
“That was a disadvantage to the Americans, opening the matter in Australian courts highlighted the weaknesses in the Lehman administration. We made them vulnerable. We attacked their achilles heal. We needed to pull that lever,” Mr Parbery said.
PPB Advisory will send a statement to creditors soon.
