SCHEME OF ARRANGEMENT LEHMAN BROTHERS INTERNATIONAL (EUROPE) (in ...

281 Pages·2017·2.18 MB·English

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to the action you should take, you should consult your professional adviser
without delay. Further copies of this Explanatory Statement can be downloaded from the Website at
https://www.pwc.co.uk/services/business-recovery/administrations/lehman.html or may be obtained from the
Company by emailing [email protected] or by writing to Lehman Brothers International
(Europe) (in administration), Level 23, 25 Canada Square, London E14 5LQ Attention: Rebecca Browne.
In the event that you have assigned, sold or otherwise transferred your interest (or any part thereof) in
your Provable Claims, you are requested to forward a copy of this Explanatory Statement to the person
or persons to whom you have assigned, sold or otherwise transferred such interest. If you intend to
assign, sell or otherwise transfer your interest (or any part thereof) in your Provable Claims, you are
requested to forward a copy of this Explanatory Statement to the person or persons to whom you intend
to assign, sell or otherwise transfer such interest.
This Explanatory Statement is for the attention of Scheme Creditors. If you do not believe that you are
a Scheme Creditor, you do not need to take any further action, however you will not be entitled to
receive any dividends in the Administration or any distributions made pursuant to the Scheme and you
will be prevented from proving for any Provable Claim after the Effective Date.
Unless stated otherwise, defined terms used in this Explanatory Statement have the meanings given to
them in Appendix 1 (Definitions and interpretation) of this Explanatory Statement.
Proposal in relation to a
SCHEME OF ARRANGEMENT
Pursuant to Part 26 of the Companies Act 2006
between
LEHMAN BROTHERS INTERNATIONAL (EUROPE) (in administration)
and its
SCHEME CREDITORS
(as defined in the Scheme Document)
______________________________________________________________________________
Scheme Meetings of Scheme Creditors of the above-named company to consider and, if thought fit, agree to
the Scheme, will be held from 4.00 pm (London time) on 5 June 2018 at Linklaters LLP, One Silk Street, London
EC2Y 8HQ, UK as set out in the Notice of Scheme Meetings at Appendix 3 (Notice of Scheme Meetings) of
this Explanatory Statement.
The actions you should take are set out in paragraph 28 (Actions to be taken by Scheme Creditors) of Part I
(Letter from the Administrators) of this Explanatory Statement. You are requested to Vote at the Scheme
Meetings in accordance with the instructions and notes contained herein.
Scheme Creditors are requested to Vote on the Scheme whether or not they intend to attend the Scheme
Meetings. If you have an Admitted Claim and wish to appoint the Chairman to Vote on your behalf at the
Scheme Meetings, you should complete and submit a Form of Proxy by making the appropriate selections via
the Portal. If you: (i) have an Admitted Claim and wish to appoint the Chairman or another person to attend the
Scheme Meetings and Vote on your behalf; or (ii) have an Undetermined Provable Claim and wish to appoint
the Chairman or another person to attend the Scheme Meetings and Vote on your behalf, you may do so by
submitting a hard copy Form of Proxy in accordance with the instructions and notes contained therein. Hard
copy Forms of Proxy: (i) may be downloaded from the Portal if you have an Admitted Claim; (ii) will be appended
to your Voting Rights Letter if you have an Undetermined Provable Claim; or (iii) can otherwise be obtained
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from the Company by email to [email protected] or by pre-paid first-class post or air mail with
delivery receipt to Lehman Brothers International (Europe) (in administration), Level 23, 25 Canada Square,
London E14 5LQ, for the attention of Rebecca Browne. If you believe you have a Provable Claim but have not
yet submitted a proof of debt, you are urged to do so as soon as possible. If you have not submitted a proof of
debt by the Record Date you will not be able to Vote at the Scheme Meetings.
Hard copy Forms of Proxy may be submitted to the Company by email to [email protected] or by
pre-paid first-class post or air mail with delivery receipt to Lehman Brothers International (Europe) (in
administration), Level 23, 25 Canada Square, London E14 5LQ, for the attention of Rebecca Browne.
Forms of Proxy should be submitted as soon as possible and, in any event, so as to be received by the
Company no later than 5.00 pm (London time) on 4 June 2018. Hard copy Forms of Proxy not so received may
be handed to the Chairman at the Scheme Meetings.
Scheme Creditors may attend and Vote in person at the relevant Scheme Meetings. If a Scheme Creditor is a
company or corporation and wishes to attend the Scheme Meeting(s) and Vote in person, it must appoint an
individual as its representative at the relevant Scheme Meetings and that representative must produce at the
Scheme Meeting(s) an appropriately certified copy of the resolution of directors or other governing body of the
company or corporation evidencing that he or she is authorised to act as its representative at the Scheme
Meeting(s).
In the event that the Scheme is approved by Scheme Creditors, a hearing before the High Court is necessary
in order to sanction the Scheme. All Scheme Creditors are entitled to attend the High Court hearing in person
or through counsel to support or oppose the sanctioning of the Scheme. It is expected that the High Court
hearing will be held on or around 13 June 2018.
This Explanatory Statement has been prepared solely in connection with the proposed Scheme. Nothing in this
Explanatory Statement or any other document issued with or appended to it should be relied on for any other
purpose.
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Legal Advisers to the Company and the Administrators:
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Administrators of the Company:
Mr. Russell Downs Mr. Anthony Victor Lomas
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
7 More London Riverside 7 More London Riverside
London London
SE1 2RT SE1 2RT
Mr. Steven Anthony Pearson Mr. Julian Guy Parr
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
7 More London Riverside 7 More London Riverside
London London
SE1 2RT SE1 2RT
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Important Notice to Scheme Creditors
This Explanatory Statement has been prepared in connection with the proposed Scheme between
the Company and its Scheme Creditors.
The information contained in this Explanatory Statement has been prepared by the Company and
the Administrators, based upon information available to them.
The statements contained herein are made as at the date of this Explanatory Statement, unless
some other time is specified in relation to them, and provision of this Explanatory Statement shall
not give rise to any implication that there has been no change in the facts set forth herein prior to
the date of this Explanatory Statement.
Certain of the statements in this Explanatory Statement are forward-looking statements with respect
to the outcome of the Scheme and certain aspects of the Administration. These forward-looking
statements can be identified by the fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”,
“intend”, “plan”, “goal”, “believe”, “will”, “may”, “should”, “would”, “could” or other words of similar
meaning. These statements are based on numerous assumptions and assessments by the
Administrators in light of their experience and their perception of expected future developments and
other factors which they believe appropriate. By their nature, forward-looking statements involve risk
and uncertainty, and the factors described in the context of such forward-looking statements in this
Explanatory Statement could cause actual results and developments to differ materially from those
expressed in or otherwise implied by such forward-looking statements. You should review carefully
paragraph 13 (Risk Factors) of Part III (Implementing the Scheme, risk factors and expected
outcomes) of this Explanatory Statement for a more complete discussion of the risks associated with
such statements, the Scheme and certain aspects of the Administration. Should one or more of
these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual
results may vary materially from those described herein. The Administrators do not assume any
obligation to update or correct or revise any forward-looking statements contained in this
Explanatory Statement to reflect any change of expectations with respect thereto or any change in
event, situation or circumstances on which any such forward-looking statement was based.
Nothing contained herein shall constitute any admission of any fact or liability on the part of the
Company or the Administrators with respect to any asset to which it, they or any Scheme Creditor
may be entitled or any claim against it, them or any Scheme Creditor.
The summary of the principal provisions of the Scheme and related matters in Part II (Summary of
the terms of the Scheme of Arrangement) of this Explanatory Statement is qualified in its entirety by
reference to the Scheme Document, the full text of which is set out in Appendix 2 (Scheme of
Arrangement) of this Explanatory Statement. Each Scheme Creditor is advised to read and consider
carefully the text of the Scheme Document itself. This is because the Explanatory Statement has
been prepared solely to assist Scheme Creditors in respect of Voting on the Scheme and nothing in
the Explanatory Statement or any documents issued with or appended to it should be relied upon
for any other purpose.
No person has been authorised by the Company or the Administrators to make any representations
concerning the Scheme which are inconsistent with the statements contained herein, and, if made,
such representations may not be relied upon as having been so authorised.
Scheme Creditors should not construe the contents of this Explanatory Statement as legal, tax or
financial advice. Scheme Creditors should consider consulting professional advisers as to legal, tax,
financial or other relevant matters before taking any action in connection with the Scheme.
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EXPLANATORY STATEMENT
(in compliance with Part 26 of the Companies Act 2006)
in relation to a
SCHEME OF ARRANGEMENT
between
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
(in administration)
and its
SCHEME CREDITORS
(as defined in the Scheme of Arrangement)
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Table of Contents
Contents Page
Part I: Letter from the Administrators ........................................................................................... 6
1 Purpose of this letter .......................................................................................................... 6
2 What is a scheme of arrangement? .................................................................................. 6
3 Executive summary ............................................................................................................ 7
4 Background to the Scheme................................................................................................ 8
5 Who is a Scheme Creditor? ............................................................................................... 9
6 Who are the Scheme Parties? ......................................................................................... 10
7 Statutory Interest entitlements of 8% Creditors ............................................................ 10
8 Statutory Interest entitlements of Specified Interest Creditors ................................... 10
9 Provisions applicable to both 8% Creditors and Specified Interest Creditors ........... 11
10 Statutory Interest entitlements of Higher Rate Creditors ............................................. 11
11 Subordinated Distributions .............................................................................................. 14
12 Dispute Resolution Procedure ........................................................................................ 14
13 What rights are compromised by the Scheme?............................................................. 15
14 Bar Date.............................................................................................................................. 16
15 Tax ...................................................................................................................................... 16
16 Chapter 15 Order ............................................................................................................... 16
17 When does the Scheme become effective? ................................................................... 16
18 What happens after the Scheme has become effective? .............................................. 17
19 Continuation of the Administration ................................................................................. 17
20 Voting Rights ..................................................................................................................... 18
21 Voting at the Scheme Meetings ....................................................................................... 19
22 Splitting Votes and/or Elections ...................................................................................... 19
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23 Scheme classes ................................................................................................................ 19
24 Advantages of the Scheme .............................................................................................. 20
25 Disadvantages of the Scheme ......................................................................................... 21
26 What happens if the Scheme does not become effective? .......................................... 22
27 Anticipated payments and factors that may impact Scheme Distributions ............... 23
28 Actions to be taken by Scheme Creditors ...................................................................... 25
29 Administrators’ recommendation .................................................................................... 26
Part II: Summary of the terms of the Scheme of Arrangement................................................. 27
1 Scheme Creditors ............................................................................................................. 27
2 Non-Scheme Creditors ..................................................................................................... 27
3 Scheme Parties and the Storm and Shareholder Undertakings .................................. 28
4 Scheme Distributions paid to 8% Creditors and Specified Interest Creditors ........... 28
5 Scheme Distributions paid to Higher Rate Creditors .................................................... 29
6 The Settlement Payment Option ...................................................................................... 30
7 The Certification Option ................................................................................................... 31
8 Certifications ..................................................................................................................... 32
9 Determination and payment of the Applicable CI Payment .......................................... 34
10 The Dispute Resolution Procedure ................................................................................. 37
11 Relevant Principles ........................................................................................................... 42
12 Admitted amounts of 8% Interest Claims, Specified Interest Claims and Higher Rate
Claims ................................................................................................................................. 46
13 Payment of Scheme Distributions in full or in part ....................................................... 47
14 Adequate Reserves ........................................................................................................... 48
15 Provisions relating to all Scheme Distributions ............................................................ 49
16 Rights of Scheme Parties which are extinguished and released by the Scheme ...... 51
2
17 Rights of Scheme Parties which are not extinguished or released by the Scheme .. 53
18 Payments to Storm, the Subordinated Creditor and the Shareholder ........................ 55
19 Effect of the Company being wound-up (liquidation) ................................................... 56
20 Operating Committee ........................................................................................................ 56
21 Representations by Scheme Creditors ........................................................................... 57
22 Tax ...................................................................................................................................... 57
23 Details of material interests of the Administrators ........................................................ 60
24 Powers of the Administrators .......................................................................................... 60
25 Limit on Company’s obligations ..................................................................................... 61
26 Modifications ..................................................................................................................... 61
27 Duty to act in good faith ................................................................................................... 61
28 Extension and calculation of deadlines .......................................................................... 61
Part III: Implementing the Scheme, risk factors and expected outcomes ............................... 62
1 Introduction ....................................................................................................................... 62
2 Key dates for implementing the Scheme ........................................................................ 62
3 Voting Rights ..................................................................................................................... 64
4 Voting at the Scheme Meetings ....................................................................................... 68
5 Elections ............................................................................................................................ 69
6 Certifications ..................................................................................................................... 70
7 Split-Holdings Requests ................................................................................................... 70
8 Representations ................................................................................................................ 71
9 Submitting Forms of Proxy .............................................................................................. 71
10 Portal .................................................................................................................................. 72
11 Communications ............................................................................................................... 72
12 Meetings of Scheme Creditors ........................................................................................ 73
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13 Risk Factors ....................................................................................................................... 74
14 Anticipated payments under the Scheme ...................................................................... 76
15 Alternatives to the Scheme .............................................................................................. 79
Appendix 1 Definitions and interpretation ......................................................................................
Appendix 2 Scheme of Arrangement ..............................................................................................
Appendix 3 Notice of Scheme Meetings .........................................................................................
Appendix 4 Background to the Company, the Administration and the Surplus .........................
Appendix 5 Tranche C Order ............................................................................................................
Appendix 6 AFB/FBF Agreed Position ............................................................................................
Appendix 7 Adjudicator CVs ............................................................................................................
Appendix 8 SCG Entities ..................................................................................................................
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Key Dates and Expected Timetable1
Portal opened and UCC4s provided to Scheme Creditors 14 May 2018
with Admitted Claims
Dispatch of Voting Rights Letters (together with hard copy 14 May 2018
Forms of Proxy) to Scheme Creditors with Undetermined
Provable Claims
Record Date2 5.00 pm (London time) on 24 May
2018
Increased Voting Rights Deadline 5.00 pm (London time) on 31 May
2018
Proxy Deadline/Election Deadline3 5.00 pm (London time) on 4 June
2018
Scheme Meetings/Election Deadline4 4.00 pm (London time) on 5 June
2018
Sanction Hearing 13 June 2018
US Bankruptcy Court hearing for Chapter 15 recognition on or around 15 June 2018
Effective Date/Bar Date/Certification Deadline on or around 15 June 2018
1 These times and dates are indicative only and will depend on, among other things, the date upon which the High Court
sanctions the Scheme.
2 The Record Date is the date by which Scheme Creditors who have not already done so must submit a proof of debt in
order to Vote at the Scheme Meetings and is also the deadline for the submission of Split-Holdings Requests (if relevant).
3 This is the Election Deadline for Higher Rate Creditors appointing the Chairman as their proxy via the Portal.
4 This is the Election Deadline for Higher Rate Creditors Voting in person or by a proxy appointed pursuant to a hard copy
Form of Proxy that is handed in at the Scheme Meetings.
5