Bank failure : lessons from Lehman Brothers / edited by Dennis Faber, Niels Vermunt.
2017
KF1535.F56 B355 2017 (Map It)
On loan from Cellar, due 15. Oct 2019
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Details
Title
Bank failure : lessons from Lehman Brothers / edited by Dennis Faber, Niels Vermunt.
Published
Oxford, United Kingdom : Oxford University Press, 2017.
Call Number
KF1535.F56 B355 2017
Edition
First edition.
ISBN
9780198755371
0198755376
0198755376
Description
xxxv, 388 pages ; 26 cm
System Control No.
(OCoLC)992688797
Summary
This new book analyses the legal and practical issues experienced during the Lehman Brothers litigation, the largest and most complex bankruptcy proceedings in history. By examining the issues the work provides a useful reference source for future large scale and cross-border bankruptcy proceedings of multinational groups. The author team includes experts from the various jurisdictions in which Lehman Brothers was operative, many of whom were involved in the litigation. The authors set out practical solutions to the issues faced, concerning, for example, the use of existing payment and settlement systems for consent solicitation, and filing instructions and insolvency distributions. Economic challenges, such as the valuation of distressed financial instruments, are also considered. Additionally, the book provides a critique of the current law, analysis of the interpretation and scope of core legal principles and makes recommendations for regulatory reform and judicial cooperation.In this book first-hand accounts by key parties in the insolvency proceedings with expertise on the main issues are complemented by the views of selected independent experts to provide the first complete work on this ground-breaking litigation.
Note
This new book analyses the legal and practical issues experienced during the Lehman Brothers litigation, the largest and most complex bankruptcy proceedings in history. By examining the issues the work provides a useful reference source for future large scale and cross-border bankruptcy proceedings of multinational groups. The author team includes experts from the various jurisdictions in which Lehman Brothers was operative, many of whom were involved in the litigation. The authors set out practical solutions to the issues faced, concerning, for example, the use of existing payment and settlement systems for consent solicitation, and filing instructions and insolvency distributions. Economic challenges, such as the valuation of distressed financial instruments, are also considered. Additionally, the book provides a critique of the current law, analysis of the interpretation and scope of core legal principles and makes recommendations for regulatory reform and judicial cooperation.In this book first-hand accounts by key parties in the insolvency proceedings with expertise on the main issues are complemented by the views of selected independent experts to provide the first complete work on this ground-breaking litigation.
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Table of Contents
Table of Cases
xvii
Table of Legislation
xxvii
List of Contributors
xxxiii
Part I: United States
1.
Rise and Fall of Lehman Brothers
3
I.
Introduction / Anton R. Valukas Daniel R. Murray Robert L. Byman
II.
Examiner's Appointment / Anton R. Valukas Daniel R. Murray Robert L. Byman
A.
Document collection and review / Anton R. Valukas Daniel R. Murray Robert L. Byman
B.
Witness interview process / Anton R. Valukas Daniel R. Murray Robert L. Byman
III.
Brief History / Anton R. Valukas Daniel R. Murray Robert L. Byman
IV.
Why Did Lehman Fail? / Anton R. Valukas Daniel R. Murray Robert L. Byman
A.
Lehman adopts a more aggressive business model / Anton R. Valukas Daniel R. Murray Robert L. Byman
B.
With more aggressive growth came more risk / Anton R. Valukas Daniel R. Murray Robert L. Byman
C.
Repo 105 / Anton R. Valukas Daniel R. Murray Robert L. Byman
D.
Where were the regulators? / Anton R. Valukas Daniel R. Murray Robert L. Byman
E.
Lehman weekend / Anton R. Valukas Daniel R. Murray Robert L. Byman
2.
Liquidation of Lehman Brothers Inc, the New York Brokerage of the Lehman Global Enterprise / Anton R. Valukas Daniel R. Murray Robert L. Byman
31
I.
Overview of a SIPA Liquidation and its Purposes / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
A.
SIPA's enactment in 1970 / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
B.
Significant SIPA amendments / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
C.
Pre-liquidation regulatory regime / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
II.
LBI's Historical Background and the Story of its Collapse / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
III.
Key Aspects of the LBI Liquidation / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
A.
emergency sale to Barclays / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
B.
control of information and records / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
C.
Account transfers / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
D.
PIK note transfer / James W. Giddens Kenneth J. Caputo Christopher K. Kiplok
E.
Atomization of foreign affiliates with different regulatory regimes / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
F.
general estate-LBI's role as a major counterparty in markets for derivatives and other complex financial products / Kenneth J. Caputo James W. Giddens Christopher K. Kiplok
IV.
Litigation over the Status of Claims by LBI's Counterparties to Complex Financial Instruments / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
A.
TBA litigation / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
B.
repo litigation / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
V.
Reflections on the LBI Liquidation and Post-LBI Reforms / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
3.
Lehman's Derivative Portfolio: A Chapter 11 Perspective / Kenneth J. Caputo Christopher K. Kiplok James W. Giddens
59
I.
ISDA Master Agreements and Netting / Stephen J. Lubben
II.
Safe Harbours / Stephen J. Lubben
III.
Lehman's Derivatives / Stephen J. Lubben
IV.
Close-Out Netting and Value Destruction in Chapter 11 / Stephen J. Lubben
V.
Close-Out Netting, Clearinghouses, and OLA / Stephen J. Lubben
VI.
Systemic and Societal Considerations / Stephen J. Lubben
4.
Lessons from Lehman: Forcing a Settlement of Substantive Consolidation / Stephen J. Lubben
75
I.
Introduction / Daniel M. Eggermann Thomas Moers Mayer
II.
Substantive Consolidation, Generally / Daniel M. Eggermann Thomas Moers Mayer
III.
Substantive Consolidation in Lehman / Daniel M. Eggermann Thomas Moers Mayer
IV.
Settlements and Unfair Discrimination / Daniel M. Eggermann Thomas Moers Mayer
V.
Lessons from Lehman / Daniel M. Eggermann Thomas Moers Mayer
5.
Lehman Brothers and Equitable Subordination in Cross-Border Proceedings / Daniel M. Eggermann Thomas Moers Mayer
89
I.
Enron Standard / Harrison L. Denman
II.
Lehman Brothers and the Enron Standard in the US Context / Harrison L. Denman
III.
Lehman Brothers and the Enron Standard in the Cross-Border Context / Harrison L. Denman
IV.
Consequences of Lehman for Equitable Subordination in Cross-Border Proceedings / Harrison L. Denman
Part II: United Kingdom / Harrison L. Denman
6.
How Has English Law Coped with the Lehman Collapse? / Harrison L. Denman
109
I.
Common Law / Justice Briggs
II.
Statute and Regulation / Justice Briggs
III.
ISDA Contract / Justice Briggs
A.
Section 2(a)(iii) / Justice Briggs
B.
Valuation on close-out / Justice Briggs
IV.
Anti-Deprivation / Justice Briggs
V.
Cross-Border Issues / Justice Briggs
VI.
Practice and Procedure / Justice Briggs
7.
Extended Liens / Justice Briggs
128
I.
Nature and Purpose of Extended Liens / Hamish Anderson
II.
Conceptual Impossibility / Hamish Anderson
III.
Defining a Charge / Hamish Anderson
IV.
Questions Arising / Hamish Anderson
V.
Indivisibility / Hamish Anderson
VI.
Consequences of Repayment of C by B / Hamish Anderson
VII.
Consequences of Enforcement by A / Hamish Anderson
VIII.
Can A Extract a Price from C? / Hamish Anderson
IX.
Treatment of an Extended Lien in B's Insolvency / Hamish Anderson
X.
FSC v Lemma Europe Insurance Company Limited / Hamish Anderson
XI.
Conclusions / Hamish Anderson
8.
Management and Distribution of LBIE's Client Assets / Hamish Anderson
147
I.
Factual Background and the Legal Issues They Raised / David Ereira
A.
Why did LBIE hold client assets? / David Ereira
B.
Two estates in one administration: The trust estate / David Ereira
C.
Trust law is the basic law for dealing with client assets / David Ereira
D.
Trust property could be used to satisfy liabilities to the house / David Ereira
E.
Trust property could be rehypothecated / David Ereira
F.
Trust property needed to be recovered and was often held in mixed omnibus accounts / David Ereira
G.
insolvency was sudden and there were many unsettled or failed trades / David Ereira
H.
Other people including affiliates had proprietary claims and wanted to be treated as customers too / David Ereira
I.
Many assets were held at LBI / David Ereira
J.
How could claims be finalized? / David Ereira
K.
Information was incomplete and unreliable / David Ereira
II.
Managing Both the Trust and the House Estate Side-By-Side / David Ereira
III.
Solving the Legal Questions / David Ereira
IV.
Scheme of Arrangement / David Ereira
V.
CRA / David Ereira
VI.
What Was the Problem with Client Money? / David Ereira
VII.
What Were the Issues with the US Assets? / David Ereira
VIII.
Resolution of the LBI Client Asset Claim / David Ereira
IX.
Affiliate Claims: Was LBIE a Trustee for its Affiliates? / David Ereira
X.
Aftermath: Reform and the SAR / David Ereira
9.
Lessons of LBIE: Reuse and Rehypothecation / David Ereira
171
I.
Introduction / Joanna Benjamin
II.
Nature of Reuse of Securities Collateral / Joanna Benjamin
A.
Economic nature / Joanna Benjamin
B.
Legal nature and terminology / Joanna Benjamin
III.
Prime Broker Rehypothecation / Joanna Benjamin
A.
Overview / Joanna Benjamin
B.
deal and hypo limits / Joanna Benjamin
C.
Legal position / Joanna Benjamin
D.
Operational aspects of rehypothecation / Joanna Benjamin
E.
Inadvertent rehypothecation / Joanna Benjamin
IV.
Rehypothecation and the Failure of LBIE / Joanna Benjamin
A.
failure / Joanna Benjamin
B.
Doctrine: the role of property rights / Joanna Benjamin
C.
Process / Joanna Benjamin
D.
Property remedies rejected as impracticable / Joanna Benjamin
E.
Practical problems / Joanna Benjamin
F.
Central issue: complexity of encumbrance key factor in delays / Joanna Benjamin
G.
Impact of rehypothecation / Joanna Benjamin
H.
Compare US experience / Joanna Benjamin
I.
Key role of securities finance in failure / Joanna Benjamin
V.
Post-Crisis Client Asset Measures / Joanna Benjamin
A.
FSA/FCA / Joanna Benjamin
B.
FSB / Joanna Benjamin
C.
MiFID II / Joanna Benjamin
D.
AIFMD / Joanna Benjamin
E.
UCITS V / Joanna Benjamin
F.
EMIR / Joanna Benjamin
G.
CSDR / Joanna Benjamin
H.
SFTR / Joanna Benjamin
I.
Conclusions / Joanna Benjamin
VI.
Securities Finance and the Reuse of Securities Collateral / Joanna Benjamin
A.
Origination transactions: reuse into the shadow / Joanna Benjamin
B.
Market transactions: Reuse within the shadow / Joanna Benjamin
VII.
Repo Run / Joanna Benjamin
VIII.
Post-Crisis Systemic Measures / Joanna Benjamin
A.
FSB / Joanna Benjamin
B.
SFTR / Joanna Benjamin
C.
Generally / Joanna Benjamin
IX.
Transactional Integrity / Joanna Benjamin
A.
Once a mortgage / Joanna Benjamin
B.
FCAD protection of right of use / Joanna Benjamin
C.
Recognition of TTCA / Joanna Benjamin
D.
Recharacterization risk / Joanna Benjamin
E.
Position v title / Joanna Benjamin
E.
Credit protection / Joanna Benjamin
X.
Conclusions / Joanna Benjamin
A.
Costs of rehypothecation and reuse / Joanna Benjamin
B.
Value of rehypothecation and reuse / Joanna Benjamin
10.
English Law Treatment of Lehman's Derivatives Positions / Joanna Benjamin
227
I.
Introduction / Simon Firth
II.
Exchange-Traded Positions / Simon Firth
III.
ISDA Master Agreement / Simon Firth
IV.
Section 2(a)(iii) / Simon Firth
V.
Value Clean Principle / Simon Firth
VI.
Credit Risk / Simon Firth
VII.
Obtaining Quotations / Simon Firth
VIII.
Default Interest / Simon Firth
IX.
Conclusion / Simon Firth
11.
Scope and Application of the Anti-Deprivation Rule / Simon Firth
257
I.
Introduction: What Is the Anti-Deprivation Rule About? / Sarah Worthington
II.
How Did the Anti-Deprivation Issue Arise in the Lehman Litigation? / Sarah Worthington
III.
Contrasting UK and US Approaches / Sarah Worthington
IV.
Crucial Elements of the UK Pari Passu and Anti- Deprivation Rules / Sarah Worthington
V.
Do These Rules Apply in an Administration? / Sarah Worthington
VI.
Controversies and Uncertainties / Sarah Worthington
VII.
Pari Passu: Defining the Insolvent's Assets or Distributing Them? / Sarah Worthington
VIII.
Which Rule? Can the Same Transaction Offend Both Rules? / Sarah Worthington
IX.
Good Faith Requirement in the Anti-Deprivation Rule / Sarah Worthington
X.
Anti-Deprivation: A Relevant Deprivation or Not? / Sarah Worthington
A.
What question must be answered? / Sarah Worthington
B.
forfeited assets were paid for by the preferred creditor / Sarah Worthington
C.
'Flawed assets' / Sarah Worthington
D.
Late insertion of the insolvency trigger / Sarah Worthington
E.
Flawed assets: forfeiture of an asset or defining a limited asset? / Sarah Worthington
F.
Forfeiting an asset or suspending its enjoyment? / Sarah Worthington
G.
Enjoying a new asset rather than forfeiting an old one / Sarah Worthington
H.
Leases and licences terminated on insolvency / Sarah Worthington
I.
Forfeiture of an asset and termination of a contract / Sarah Worthington
XI.
Conclusion / Sarah Worthington
Part III: Europe / Sarah Worthington
12.
Use of a Composition Plan as a Valuation and Distribution Framework / Sarah Worthington
289
I.
Introduction / Dennis Faber Frederic Verhoeven Niels Vermunt
II.
Parties in the Custody Chain and Creditor Rights in Dutch Insolvency Proceedings / Dennis Faber Frederic Verhoeven Niels Vermunt
A.
General remarks / Dennis Faber Frederic Verhoeven Niels Vermunt
B.
creditor in the custody chain for the purposes of Dutch insolvency proceedings / Dennis Faber Frederic Verhoeven Niels Vermunt
III.
Submission and Admission of Insolvency Claims / Dennis Faber Frederic Verhoeven Niels Vermunt
A.
submission procedure / Dennis Faber Frederic Verhoeven Niels Vermunt
B.
admission of insolvency claims / Frederic Verhoeven Dennis Faber Niels Vermunt
C.
Evaluation of the CSM in relation to the submission and admission of claims / Dennis Faber Frederic Verhoeven Niels Vermunt
D.
Special proceedings concerning a large number of creditors / Dennis Faber Frederic Verhoeven Niels Vermunt
IV.
Use of a Composition Plan as a Valuation and Distribution Framework / Frederic Verhoeven Dennis Faber Niels Vermunt
A.
Pursuing a consensual deal / Frederic Verhoeven Dennis Faber Niels Vermunt
B.
General description of the procedure for the adoption of a composition plan / Frederic Verhoeven Dennis Faber Niels Vermunt
C.
Solicitation of voting instructions / Dennis Faber Frederic Verhoeven Niels Vermunt
D.
voting procedure / Dennis Faber Frederic Verhoeven Niels Vermunt
E.
Confirmation of the composition plan by the court / Dennis Faber Frederic Verhoeven Niels Vermunt
F.
Cram down mechanism / Frederic Verhoeven Dennis Faber Niels Vermunt
G.
Governance of LBT in voluntary liquidation / Dennis Faber Frederic Verhoeven Niels Vermunt
V.
Conclusions / Dennis Faber Frederic Verhoeven Niels Vermunt
13.
Valuation of LBT Notes: An Application of Dutch Insolvency Law / Frederic Verhoeven Dennis Faber Niels Vermunt
333
I.
Introduction / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
II.
Procedure Applied by the LBT Bankruptcy Trustees / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
III.
General Legal Valuation Principles Applicable in the LBT Proceedings / Dennis Faber Gareth Davies Niels Vermunt Mark Helmantel
A.
General / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
B.
Contractual amount versus the admissible amount of insolvency claims / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
C.
Fixation of admissible claims and the admissible amount / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
D.
Special treatment of specific types of insolvency claims / Dennis Faber Gareth Davies Niels Vermunt Mark Helmantel
IV.
General Economic Aspects of the Valuation of LBT Notes / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
A.
Fair value as a valuation framework / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
B.
Application of fair value to the LBT Notes / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
C.
Discount rates and the issuer credit spread / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
D.
Liquidated LBT Notes that mature after the 12 Month Anniversary Date / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
E.
Unliquidated LBT Notes that mature after the 12 Month Anniversary Date / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
F.
Treatment of post-commencement interest / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
V.
Recommendations for Future Law Reform / Gareth Davies Dennis Faber Mark Helmantel Niels Vermunt
A.
General remarks / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
B.
Fixation principle / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
C.
Unmatured claims / Dennis Faber Niels Vermunt Mark Helmantel Gareth Davies
D.
Unliquidated claims / Dennis Faber Gareth Davies Niels Vermunt Mark Helmantel
E.
Post-commencement interest claims / Mark Helmantel Dennis Faber Niels Vermunt Gareth Davies
F.
Foreign currency claims / Niels Vermunt Dennis Faber Gareth Davies Mark Helmantel
VI.
Conclusions / Dennis Faber Niels Vermunt Gareth Davies Mark Helmantel
14.
Derivatives in Cross-Border Insolvency Proceedings / Niels Vermunt Dennis Faber Gareth Davies Mark Helmantel
353
I.
Introduction / Francisco Garcimartin
II.
Pre-Crisis Scenario: Privileged Status of Derivatives and Financial Collateral / Francisco Garcimartin
A.
Substantive-law level ('safe harbours') / Francisco Garcimartin
B.
Conflict-of-laws level / Francisco Garcimartin
III.
Post-Crisis: The Review of 'Safe Harbours' / Francisco Garcimartin
A.
Substantive-law level / Francisco Garcimartin
IV.
Concluding Remarks / Francisco Garcimartin
Index / Francisco Garcimartin
375