Lehman liquidators offer multi-million-dollar settlement

The local liquidators of collapsed US investment bank Lehman Brothers are seeking a settlement with Australian creditors, including 70 local councils, charities and churches which won a landmark case against the company last year.

If the settlement is approved by the Federal Court then the former Lehman clients will get $211 million in compensation, less than half of what they are owed.
The liquidator of Lehman Brothers Australia is offering up to 49 cents in the dollar in compensation for its Australian creditors who purchased investments linked to the global financial crisis.
The investments plunged in value during the GFC.
Last September, the Federal Court ruled that the Australian arm of Lehman had mislead investors when they sold the complex investments known as synthetic collateralised debt obligations.
The payout will be made in return for the class action being dropped.
The class action was led by Wingecarribee and Parkes Shire Councils in New South Wales and the City of Swan in Western Australia.
They claimed more than $200 million dollars, but the liquidator, PPB Advisory,  has calculated their losses at $143 million.
John Walker from litigation funder, IMF Australia, which funded the class action, says the plaintiffs will get about half of that.
"The related party creditors will end up with $50 or $60 million, and the balance will be distributed to the churches, councils and charities," he said.
"So, in total, in excess of $200 million, our clients share of that is likely to be around $70 million."
The liquidators of Lehman Brothers Australia say the estate has total assets of around $300 million, but it owes around $650 million.
Of the $650 million, former clients have claimed losses of nearly $500 million.
The settlement needs to be approved by creditors and the Federal Court.
The collapse of Lehman Brothers in September 2008 triggered the global financial crisis.
Lehman's failure left debts of more than $600 billion globally.