Lehman waterfalls break UK precedent

Author: Tom Young | Published: 25 Jan 2017

More than eight years after Lehman Brothers filed for bankruptcy, the so-called Lehman waterfall cases continue to drip through UK courts, creating precedent for a range of unique points of law.

The latest of the cases – waterfall III – saw a claim for £10 billion ($12.46 billion) by the administrators of Lehman Brothers’ European operations (LBIE) come before the London High Court on January 16. The case centres on the legal relationship between LBIE and Lehman Brothers Ltd. LBIE was converted into an unlimited liability company years before its collapse, which it argues means it can claim back any losses against its shareholders, including Lehman Brothers Ltd. The case is ongoing.

A Lehman employee leaves the bank's New York offices in September 2008Aside from the sheer complexity of the Lehman unwinding, the unique – and uniting – factor driving the three cases is the nature of the surplus due...