Case details

Lehman Brothers Limited (In Administration) (Appellant) v Lehman Brothers International (Europe) (In Administration) (Respondent)

Case ID: UKSC 2015/0139

Case summary

  1. The proper ranking of certain subordinated debt in the insolvency 'waterfall';
  2. Whether the creditors of a company in administration whose provable claims are denominated in a foreign currency are entitled to payment (as non-provable liabilities of the company) of the balance of such claims which remains outstanding following the process of proof as a result of a decline in value of sterling against the currency of the claim between the commencement of the administration of that company and the dates of dividend distributions and, if so, the proper ranking of such claims;
  3. Whether statutory interest accruing but unpaid during a company's administration is payable in that company's subsequent liquidation;
  4. The scope of liability of members in an unlimited company under s.74 of the Insolvency Act 1986;
  5. Whether an unlimited company in administration can submit a proof of debt in a distributing administration or liquidation of one of its members, with respect to a contribution claim pursuant to s.74 of the Insolvency Act 1986;
  6. Whether the 'contributory rule' (whereby a contributory of a company in liquidation could not recover anything in respect of any claims he might have as a creditor until he had fully discharged his obligations as a contributory) extends to administrations.

Lehman Brothers International (Europe) ('LBIE') entered administration in September 2008 during the global collapse of the Lehman Brothers group. LBIE has a large surplus following payment of or provision for unsubordinated proved debts in full. Various groups of creditors claim to be entitled to payments from the surplus. They include creditors claiming statutory interest, subordinated debt holders and foreign currency creditors. LBIE is an unlimited company with (according to Companies House and LBIE's share register) two members (LB Holdings Intermediate 2 Limited and Lehman Brothers Limited, the second and third appellants). Both have filed ordinary unsecured claims against LBIE and LB Holdings Intermediate 2 Limited has filed a large claim as a subordinated loan creditor. The first appellant, Lehman Brothers Holdings Inc, is the ultimate parent company for the Lehman Brothers group.

Judgment appealed

[2015] EWCA Civ 485



Lehman Brothers Limited (In Administration)


Lehman Brothers International (Europe) (In Administration) and others



Lord Neuberger, Lord Kerr, Lord Clarke, Lord Sumption, Lord Reed

Hearing start date

17 Oct 2016

Hearing finish date

20 Oct 2016

Watch hearing
17 Oct 2016 Morning session Afternoon session
18 Oct 2016 Morning session Afternoon session
19 Oct 2016 Morning session Afternoon session
20 Oct 2016 Morning session