By Angela Dorizas
Councils that invested with failed bank Lehman Brothers Australia will recoup between 2c and 13c in the dollar after creditors decided against winding up the company.
Creditors have approved a deed put forward by Lehman Brothers Asia to ensure that Lehman Brothers’ executives receive the $11 million in pay owing to them, which is mostly in retention and bonus payments.
The decision is a huge loss to local government, particularly in New South Wales, where councils invested a total of $625.6 million in toxic securities through Lehman Brothers and its predecessor Grange Securities.
The PPB administrator managing Lehman Brothers Australia, Neil Singleton, said the creditors’ decision would prevent further litigation.
The company is already in a legal battle with a former council client, Wingecarribee Shire Council, over misleading investment advice.
The deed put forward by creditor Lehman Brothers Asia also offered to cover the company’s legal costs.
Related Story: Federal Court upholds Lehman Bros appeal
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