REPORT TO CREDITORS LEHMAN BROTHERS AUSTRALIA LIMITED (IN LIQUIDATION) ACN 066 797 760 9 December 2009 S. J. Parbery & N. G. Singleton Joint Liquidators 1 Contents Section Page Annexure Listing 3 Abbreviations 4 1 Executive Summary 5 2 Proceedings to Terminate the Deed 8 3 Summary of Financial Position 10 4 Unwinding of Lehman Originated CDO’s 11 5 Meeting of Creditors 13 6 Other Matters 15 2 Annexure Listing Annexure Description A Potential Outcomes of Deed Termination Proceedings B Form 529 - Notice of Meeting C Form 532 - Proxy D Form 535 – Formal Proof of Debt E Receipts and Payments from 26 September 2008 to 30 November 2009 F Deed Administrators/Liquidators time costs for the period 18 September to 30 November 2009 3 Abbreviations Act means the Corporations Act 2001 LBA Holdings means Lehman Brothers Australia Holdings Pty ASIC means the Australian Securities and Investments Limited (Subject to Deed of Company Arrangement) Commission LBAM means Lehman Brothers Asset Management Limited (in Australian Lehman Group means Lehman Brothers Australia Liquidation), formerly known as Grange Asset Management Holdings Pty Limited and its subsidiary and related companies Limited BNY means Bank of New York Mellon LBHI means Lehman Brothers Holdings Inc, the ultimate US Bond means a debt security issued by a borrower to the Holding Company that has filed a voluntary petition for bondholder who is a creditor reorganisation pursuant to Chapter 11 of the Bankruptcy Code CDO means Collateralised Debt Obligation which is a financial of the United States instrument LBIE means Lehman Brothers International (Europe) Collateral means a security interest held over identified LBSF means Lehman Brothers Special Financing Inc securities and other assets, available to the issuer of securities LBTC means Lehman Brothers Treasury Co BV (In Bankruptcy) Company means Lehman Brothers Australia Limited Parkes Council means Parkes Shire Council Contingent Litigation Creditor means entities or persons that Perpetual means Perpetual Trustee Company Limited have commenced, or are contemplating commencing, Plaintiffs means Wingecarribee, Parkes and Swan together proceedings against LB Australia for, amongst other things, Liquidators means the Provisional Liquidator of the Lehman misleading and deceptive conduct in offering for sale certain Brothers Asian Entities financial products Supreme Court means the Equitable Division of the Supreme Corporations Act means the Corporations Act 2001 Court in each applicable State of Australia Deed means Deed of Company Arrangement Swan Council means City of Swan Council Federal Court means Federal Court of Australia USD means United States Dollar Full Federal Court means a full bench of the Federal Court US Bankruptcy Court means US Bankruptcy Court, Southern High Court means the High Court of Australia District of New York LB Asia means Lehman Brothers Asia Limited (Liquidators Wingecarribee means Wingecarribee Shire Council Appointed). LB Asia Holdings means Lehman Brothers Asia Holdings Limited (Liquidators Appointed) LB Australia means Lehman Brothers Australia Limited (In Liquidation) formerly known as Grange Securities Limited LB Inc means Lehman Brothers Incorporated LBA Finance means Lehman Brothers Australia Finance Pty Limited (Subject to Deed of Company Arrangement) LBA Granica means Lehman Brothers Australia Granica Pty Limited (Subject to Deed of Company Arrangement) 4 1 Executive Summary 1.1 PROCEEDINGS TO TERMINATE THE DEED 1.2 DETERIMINATION OF LIABILITIES & DIVIDEND DISTRIBUTION As noted in previous Reports, legal proceedings were commenced by the Plaintiffs in the Federal Court to terminate There has been no significant change in the financial position of the Deed. At the commencement of the proceedings, the the Administration since our 11 September report. Plaintiffs had proposed that a series of questions be answered by the Federal Court prior to the substantive argument as to We continue to review claims made by the contingent creditors whether or not the Deed should be terminated on the grounds of that have been filed with our office. However, we are unable to unfair prejudice or oppression. These separate questions were provide any further complexion as to the population and nature heard before the Full Federal Court. of such claims as the process has yet to be completed. The Full Federal Court handed down its findings with respect to At this time, given the future of the Company is uncertain, we the separate questions on 25 September 2009. At a subsequent are unable to provide any indicative timing as to when a dividend Federal Court hearing on 2 October 2009, the Company was is likely be paid. Furthermore, if the Company remains in wound up and we were appointed Official Liquidators. liquidation following the completion of the appeal process, distributions to creditors will not proceed until such time that all On 23 October 2009 we were notified that LBHI and LB Asia creditor claims (i.e. actual and contingent) have been Holdings had filed applications with the High Court for Special determined. Leave to Appeal the Full Federal Court decision. 1.3 UNWINDING OF LEHMAN ORIGINATED CDO’S The Special Leave Application is set down to be heard on 11 December 2009. In the instance leave is granted, we are As discussed in previous reports, in particular our 11 September hopeful that the High Court will be in a position to hear the Report, various Lehman originated CDO’s are being unwound substantive appeal in the first quarter of 2010. However, the with proceedings taking place in the United Kingdom and the timing of the hearing will be dependent upon the High Court’s United States to recover the underlying collateral. availability. As noted in the 11 September Report, the Noteholders were We discuss these legal proceedings in further detail at Section 2 successful at trial on the Noteholder priority issue in the United of this Report. Kingdom. The effect of this decision should be that Noteholders directly receive from the trustee the underlying collateral rather than such amounts being paid to LBSF (the counterparty to a credit default swap). This should ultimately see the loss suffered by Noteholders (if any) significantly reduced. LBSF subsequently lost an appeal of that decision to the Court of Appeal and the first instance decision remains in place. 5 1 Executive Summary (cont) However, immediately following that ruling, LBSF asked the Clayton Utz Court of Appeal for consent to appeal to the Supreme Court. Level 34 This application failed. We understand that LBSF intends (if not 1 O’Connell Street already) to file leave to appeal directly with the Supreme Court. Sydney NSW We will update creditors with respect to this aspect of the litigation in due course. The purpose of this meeting is to discuss this Report and to provide creditors with a forum to ask questions surrounding the Finally, we note that there remain two further issues in the current position of the liquidation. matter that the Court needs to consider, being the extent of the indemnity to be given by the Noteholders to the trustee and In addition to the above, it is also our intention to provide whether the English proceedings should be stayed i.e. deferred creditors with an opportunity to form a Committee of Inspection. to the US Court. These matters are not expected to be heard until after the Noteholder priority issue has been finally Notice, proxy and proof of debt forms are attached at Annexures determined by any appeal to the Supreme Court. B, C and D respectively. Contemporaneously, there are proceedings taking place in the Please refer to Section 5 of this Report for further information United States in which LBSF had filed a motion for summary with respect to this meeting. judgment in respect to Mahogany Notes (the material terms of which mirror the other Lehman originated CDO’s in relation to 1.5 ADMINISTRATORS' REMUNERATION Noteholder priority). As detailed in previous communication, creditors approved the The hearing with respect to this matter took place on 18 Deed Administrators future remuneration to an interim upper November 2009. As at the date hereof, no decision has been limit of $750,000 plus GST. To date, we have drawn handed down. $743,829.25 plus GST in respect to those costs for the period 12 June to 17 September 2009. We understand that there is an automatic right of appeal and would therefore expect BNY, as trustee, on behalf of the As discussed in previous reports, we had proposed to circulate Noteholders to take advantage of such right should an adverse our ongoing costs in this matter to the Committee for approval at decision be forthcoming. regular intervals rather than being provided with a further interim limit. However, as a consequence of the Company being placed 1.4 MEETING OF CREDITORS in liquidation, the Committee was rendered nugatory and as such, was not capable of determining any matters, including the A meeting of creditors has been scheduled for 05 January 2010 approval of the Deed Administrators' remuneration. at 11.00am. This meeting will be held at the following location: 6 1 Executive Summary (cont) We note that we have outstanding costs in this matter which amount to $544,279 (plus GST) for the period 18 September to 30 November 2009. We attach at Annexure F a summary of those costs. We will be requesting that creditors approve these time costs at the forthcoming meeting of creditors. 7 2 Proceedings to Terminate the Deed 2.1 BACKGROUND Creditor against a Lehman Entity are forever released, discharged and extinguished? Following the meeting of creditors held on 28 May 2009 which approved the Company executing a Deed of Company 6 If the answer to the above question is ‘yes’, are the Arrangement, legal proceedings were commenced by the provisions of the Deed binding having regard to provisions Plaintiffs in the Federal Court to terminate the Deed on the of the Corporations Act? grounds that it was oppressive and prejudicial to their interests. 7 If the answer to any of questions 2, 4 or 6 is ‘no’, is the The Plaintiffs proposed that a series of questions be answered Deed properly constructed and if not, void and of no effect? by the Federal Court prior to argument in respect of the substantive proceedings. An abridged version of the questions The position of the First to Third Defendants (LB Australia and was provided at pages 17 and 18 of the 11 September Report both Deed Administrators) was there was little, if any, utility in and which is reproduced hereunder: referring separate questions to a Full Court of the Federal Court before the final hearing, as it would further delay and would add “1 Whether the Deed confers on the Deed Administrators the unnecessary expense to the proceedings because even if the sole power to conduct and control insurance claims against separate questions were resolved in favour of the plaintiffs, it the Company’s insurers (Refer Section 8.3 of our 19 March was unlikely to dispose of the proceedings. Report)? On 23 July 2009, Rares J heard and determined the plaintiff’s 2. If the answer to the above question is ‘yes’, is the Deed valid application for the determination of separate questions and and binding having regard to provisions of the Corporations ordered that the questions would be heard before the Full Act? Federal Court on 7 August 2009. The Full Court heard the matter on that day.” 3 Whether the Deed operates so as to provide a moratorium against a General Creditor and/or a Litigation Creditor in The Court handed down its findings with respect to the separate respect of a claim or an Insurance Claim, in favour of a questions on 25 September 2009 and found that the Deed of Lehman Entity? Company Arrangement was void. It subsequently ordered that the Company be wound up and we were appointed Official 4 If the answer to the above question is ‘yes’, are the Liquidators on 2 October 2009. provisions of the Deed binding having regard to provisions of the Corporations Act? 5 Whether the Deed operates such that, upon payment in full of the Litigation Creditors’ final dividend, all claims and insurance claims of a General Creditor and/or a Litigation 8 2 Proceedings to Terminate the Deed (cont) 2.2 SPECIAL LEAVE TO APPEAL TO THE HIGH COURT 2.3 EXPECTED OUTCOME AND TIMING On 23 October 2009, we were notified that LBHI and LB Asia It is uncertain at this stage whether the High Court will grant Holdings (the Appellants) had filed applications with the High Special Leave to Appeal. However, were it to do so, we would Court for Special Leave to Appeal the findings of the Full expect that the matter would be expedited which could possibly Federal Court. result in the matter being heard in the first quarter of 2010. The Appellants argue that the Full Federal Court erred in If the matter is heard by the High Court, there are essentially concluding that provisions of a Deed providing for releases of three different outcomes that could arise: claims of certain creditors against third parties arising out of the same or substantially similar facts and circumstances as those The decision of the Federal Court is upheld i.e. the company which gave rise to those creditors’ claims against the Company would remain in liquidation; were outside the scope of Part 5.3A of the Act. The decision is overturned on a qualified basis, i.e. the deed The Appellants also argue that the Court erred in concluding that is reinstated, but without the third party releases, which in Section 447A of the Act did not permit the Court to amend a any event may result in the company being placed back into Deed so as to empower the Deed Administrators to execute on liquidation in due course; behalf of certain creditors releases of the claims against non- parties to the Deed, as such releases are within the scope of The decision is overturned in full i.e. the deed is reinstated Part 5.3A of the Act. in its entirety. A directions hearing with respect to this matter was heard on 3 We have provided at Annexure A a summary setting out the November 2009. The Application for Special Leave to Appeal potential consequences from the above possible outcomes in will be heard on 11 December 2009. We shall update creditors general terms. with respect to the High Court’s decision as to whether or not leave will be granted at the forthcoming meeting of creditors and The final position and direction of the matter will be will also issue a short advice which will be posted on our website indeterminate until clarity has been obtained from the potential (www.ppb.com.au). As parties to the original proceedings, the High Court sitting and any subsequent proceedings in the Company and the Liquidators are respondents to the appeal. Federal Court. Once that outcome is known, we shall Submissions supporting the reinstatement of the Deed have communicate same to creditors. been filed with the High Court, on behalf of the Company. 9 3 Summary of Financial Position 3.1 ASSET REALISATIONS Wingecarribee itself is an actual creditor of the Company but also to allow the liquidators to use any findings of the Court in We refer you to our 11 September 2009 report which discussed relation to damages suffered by Wingecarribee (if any) as a in detail the financial position of LB Australia at that date guide to the assessment of the loss of other contingent creditors (Section 2). (further discussed at Section 6.1). The Wingecarribee proceedings have been stayed pending the outcome of the There have been no significant changes in the financial position application for special leave to the High Court. of LBA since the 11 September report. However, by way of update, we advise as follows: 3.3 DISTRIBUTION OF MONIES TO CREDITORS 1. Funds held by the Liquidators at 30 November 2009 At this time, given the future of the Company is uncertain, we amount to $83.16m. Attached at Annexure E is a are unable to provide any indicative timing as to when a dividend Summary of Receipts and Payments for the entire period is likely be paid. Furthermore, and in any event, distributions to of the Administration i.e. 26 September 2008 (date of creditors will not proceed until such time that all creditor claims appointment as Voluntary Administrators) to 30 November (i.e. actual and contingent) have been determined. 2009. 2. The current status of proceedings to unwind the Lehman CDO’s for the benefit of Noteholders, including LB Australia, is discussed at Section 4 of this report. 3.2 DETERMINATION OF LIABILITIES We continue to review claims made by the contingent creditors that have been filed with our office. However, we are unable to provide any further complexion as to the population and nature of such claims as the process has yet to be completed. Particularly, we note that the majority of claimants have attributed values to securities which are in our view incorrect at first instance, and secondly, fail to properly value the securities themselves. In light of the above, the Liquidators requested that the Federal Court lift the stay of proceedings with respect to the Wingecarribee matter so as not only to determine whether 10 4 Unwinding of Lehman Originated CDO’s 4.1 GENERAL The Trustee has requested an order from the English Court that it be entitled to a full indemnity from Noteholders in In our 11 September Report we provided creditors with an respect of any distribution of the collateral. update with respect to the proceedings in the United Kingdom and the United States surrounding the unwinding of Lehman As noted in the 11 September Report, the Noteholders were originated CDO’s. successful at trial on the Noteholder priority issue in the UK Court. LBSF subsequently appealed that decision to the Court We set out below a summary of recent developments in this of Appeal but lost. aspect of the administration. Immediately following that ruling, LBSF sought consent from the 4.2 ENGLISH PROCEEDINGS Court of Appeal for permission to appeal to the Supreme Court. However, this application failed. We understand that LBSF As noted in the 11 September Report, The Noteholders had intends (if not already) to file leave to appeal directly with the caused the termination of the credit default swaps underlying a Supreme Court. We will update creditors with respect to this number of the Notes issued in the Dante Series. These aspect of the litigation in due course. Noteholders subsequently issued proceedings in the English High Court seeking orders that BNY distribute the underlying Finally, we note that there remains two further issues that the Collateral in accordance with Noteholder priority provisions Court needs to consider but which are not expected to be heard within the supporting documents. until after the Noteholder priority issue has been finally determined by any appeal to the Supreme Court. There were essentially three elements to the proceedings: Whilst LB Australia is a Noteholder, such notes having a face LBSF (the counterparty to the credit default swap) is value in the order of $8.0m, it is not at this time a party to the challenging Noteholder priority and is arguing that the proceedings. clauses in the documents that rank Noteholders ahead of LBSF should be struck out so that LBSF ranks first; We have been approached by the lawyers acting for those Noteholders who are party to the proceedings, to consider LBSF is arguing that the English proceedings should be providing limited funding in connection with the two remaining stayed i.e. the English Courts should defer to the US courts issues (on a proportionate basis with other Noteholders). As the and so not make any orders as to the Collateral until the US outcome of the proceedings may have a material effect on the Courts have decided whether Noteholder priority offends the value of contingent creditor claims, we are giving consideration US Bankruptcy Code; and to this request. 11 4 Unwinding of Lehman Originated CDO’s (cont) 4.3 US PROCEEDINGS As noted in our 11 September Report (at page 16), LBSF filed a motion for summary judgment in respect to Mahogany Notes (the material terms of which mirror the Dante Programme as concerns Noteholder priority) on its claim in the US Bankruptcy Court. The hearing with respect to this matter took place on 18 November 2009. It is understood a decision is likely to be issued within two to eight weeks. We understand that there is an automatic right of appeal and we would therefore expect BNY to take advantage of such right on behalf of Noteholders. 12 5 Meeting of Creditors 5.1 GENERAL corporate creditors are also required to submit a proxy if they wish to be represented at the meeting. A meeting of creditors has been scheduled for 5 January 2010 at 11.00 a.m. (A.E.D.S.T.). This meeting will be held at the Creditors are requested to return the completed proxy form (and following location: if applicable, proof of debt form) by no later than 10:00 a.m. on 4 January 2010 to one of the following: Clayton Utz Level 34 By Facsimile: +61 (0)2 8116 3111 1 O’Connell Street Sydney NSW 2000 By email: email@example.com Notice of this meeting is attached at Annexure B. By Mail: Lehman Brothers Australia Limited C/- PPB 5.2 PURPOSE OF MEETING Level 46 MLC Centre 19 Martin Place The purpose of this meeting is to discuss this Report and to SYDNEY NSW 2000 provide creditors with a forum to ask questions surrounding the current position of the liquidation. Attn: Ms Carol Pang In addition to the above, it is also our intention to provide We note that proxies received after 10:00 a.m. on 4 January creditors with an opportunity to form a Committee of Inspection. 2010 may not be accepted to vote at the meeting. 5.3 SUBMISSION OF PROOF OF DEBTS AND PROXIES We ask that if you submit your proxy and proof of debt (if applicable) by electronic means, that you forward the original We have attached at Annexure C and D proof of debt and proxy copy of same within 72 hours. forms. Any creditor who has already lodged a proof of debt will not need to complete a new proof in the event the level of their debt remains unchanged. Creditors who are unable to attend the meeting and who wish to be represented should ensure that a proxy form, power of attorney (or evidence of appointment of the company representative) is completed. In accordance with the Act, all 13 5 Meeting of Creditors (cont) 5.4 VOTING RIGHTS Motions at the meeting will be carried if: The majority of the creditors voting (whether in person, by attorney or proxy) vote in favour of that motion; and The value of the debts owed by the Company to those voting in favour of the motion are more than half of the total debts owed to all creditors voting at the meeting. Prior to the meeting, the Chairman will apply the following approach to adjudicating on the admission of creditor claims for voting purposes: Each proof of debt will be considered individually; Where claims are contingent or unliquidated in nature, the Chairman will consider the basis of that contingent or unliquidated claim and the sufficiency by which that claim has been particularised; and With respect to related parties that intend to vote at the second meeting, the Chairman will allow such claimants to vote in accordance with general ledger balances obtained from the Company’s accounting records unless that company can otherwise show that such amounts are incorrect by providing supporting documentation. Any adjudication of proofs for voting purposes at the meeting of creditors is distinctly different to any adjudication made at a later stage by the Liquidator (or Deed Administrator if the Deed is reinstated). 14 6 Other Matters 6.1 WINGEECARRIBEE PROCEEDINGS The extent of any deductibles to be applied. As a consequence of the appointment of Liquidators to LB Australia, the proceedings brought by Wingecarribee (being a In relation to the prospects of claim against LB Australia’s claim for loss and damage arising from its investments in overseas policies, we confirm that receipt of our claim has been CDO’s) were automatically stayed. acknowledged and further information has been provided as requested. The claim is under consideration. The parties appeared before the Federal Court following the Liquidator’s appointment. Lawyers for Wingecarribee did not 6.3 ADMINISTRATORS' REMUNERATION seek leave to proceed and sought an adjournment of the proceedings until after the High Court special leave application As detailed in previous communication, creditors approved the is heard. Deed Administrators' future remuneration to an interim upper limit of $750,000 plus GST. To date, we have drawn The Liquidators however petitioned the Court for leave to $743,829.25 plus GST in respect to those costs for the period 12 proceed immediately on the basis that determination of the June to 17 September 2009. matter by the court would provide guidance as to the extent of LB Australia’s liability (if any) and the damages arising thereon As discussed in our 11 September report, we had proposed to to contingent creditors. circulate our ongoing costs in this matter to the Committee for approval at regular intervals rather than being provided with a The Court determined to adjourn the proceedings until 18 further interim limit. However, as a consequence of the December 2009. Company being placed in liquidation, the Committee was rendered nugatory and as such, was not capable of determining 6.2 INSURANCE any matters, including the approval of the Deed Administrators' remuneration. In the absence of a significantly increased offer of settlement from LB Australia’s Australian based insurer, we have instructed We note that we have outstanding costs in this matter which Counsel to advise in relation to: amount to $544,279 (plus GST) for the period 18 September to 30 November 2009. We attach at Annexure F a summary of The merits of LB Australia’s claims under the relevant those costs. policies; In summary, the major aspects of our work over this period The beneficiaries of any settlement proceeds; included, amongst other matters: The appointment of any settlement proceeds between the Attending to matters surrounding the Court proceedings to beneficiaries; and terminate the Deed, including instructions to lawyers, 15 6 Other Matters (cont) reviewing submissions, attending Court hearings, preparing Management of asset book, including for instance affidavit evidence. management of CDO’s unwinding and associated legal proceedings thereon. Attending to matters surrounding the Wingecarribee proceedings, including detailed review of the file, meetings Ongoing communication with creditors, including preparation with former Company employees, briefings with lawyers and of previous notices to creditors, this Report, responding to Counsel etc. general enquiries etc. Meeting with various stakeholders to discuss alternatives to Various statutory duties including preparation of accounts current stalemate. and various other lodgements with the ASIC and the ATO. Conducting investigations with respect to intercompany At the forthcoming meeting of creditors, we will request that account balances and reconciliations thereon. creditors consider, and if thought appropriate, approve the aforementioned remuneration. Conducting investigations and preparing claims against various Lehman Global entities, including claims against LBHI and LBSF. Participating in various International Protocol meetings and sub committee meetings/teleconferences to discuss matters surrounding the orderly winding down of affairs where relevant to LB Australia. Continuing to operate the safe custody accounts and ongoing coupon payments to investors including efforts to shift irregular/small parcel holdings. Commencement of further investigations. Adjudicating upon unsecured creditor claims. Reviewing contingent creditor claims and developing model to assist with adjudication process. 16 Execution Page Should you have any queries in respect to this Report, please contact Marcus Ayres of this office on +61 2 8116 3295. Dated this 9th day of December 2009 LEHMAN BROTHERS AUSTRALIA LIMITED N. G. SINGLETON Joint Liquidator 17 UPDATE REPORT TO CREDITORS LEHMAN BROTHERS AUSTRALIA LIMITED (SUBJECT TO DEED OF COMPANY ARRANGMENT) ACN 066 797 760 ANNEXURE A Consequences of Appeal to High Court Consequences of Appeal to High Court in Relation to Decision of Federal Court to Overturn Deed of Company Arrangement Potential Outcomes Expected Consequences 1. Federal Court Decision Upheld • LBA will remain in Liquidation • LBA will make application to Federal Court to proceed with Wingecarribee matter (to provide guidance concerning determination of damages, calculations and extent of liability to Contingent Creditors). • Realisation of assets continues • Adjudication of Contingent Creditor claims (litigation/mediation) • Subject to the above, distribution of funds to creditors 2. Federal Court Decision 2.1 In Full Overturned Deed of Company Arrangement is reinstated 2.2 In Part (e.g. third party releases are excised from Deed) Deed of Company Arrangement is reinstated in all respects other than the provision of releases to third parties, but the Company may return to liquidation, if creditors of the company, particularly LB Asia Holdings, petition the deed administrators to hold a meeting and resolve to terminate the deed under clause 19.1(b) of the deed (in which case refer to 1 above). In either of the above scenarios, the likely consequences are: • Realisation of assets continuing • LBA’s Administrators will make application to the Federal Court to proceed with Wingecarribee matter. • The Plaintiffs will continue with proceedings in the Federal Court to terminate the Deed on grounds of oppression and prejudice. Plaintiff successful in Federal Court − Deed is terminated − Company placed in Liquidation (Refer 1 above) Plaintiffs unsuccessful in Federal Court − Deed survives − Distribution of Funds in accordance with Deed UPDATE REPORT TO CREDITORS LEHMAN BROTHERS AUSTRALIA LIMITED (SUBJECT TO DEED OF COMPANY ARRANGMENT) ACN 066 797 760 ANNEXURE B Form 529 – Notice of Meeting FORM 529 CORPORATIONS ACT 2001 Subregulation 5.6.12(2) NOTICE OF MEETING OF CREDITORS LEHMAN BROTHERS AUSTRALIA LIMITED A.C.N. 066 797 760 (IN LIQUIDATION) Notice is hereby given that the Meeting of Creditors of the Company will be held on Tuesday, 5 January 2010 at the offices of Clayton Utz, Level 34, 1 O’Connell Street, Sydney NSW at 11:00 a.m. (A.E.D.S.T.) AGENDA 1. To discuss the Liquidators Report to Creditors dated 9 December 2009. 2. To consider and if thought appropriate, approve the remuneration of the Deed Administrators and Liquidators for the period 18 September 2009 to 30 November 2009 in the amount of $544,279.00 plus GST. 3. To elect a Committee of Inspection. 4. Any other matters. Telephone conference facilities are available upon request. Please contact Carol Pang of this office for arrangements. Registrations will commence at 9.30 a.m. (A.E.D.S.T.) DATED this 9th day of December 2009 N. G. SINGLETON Joint and Several Official Liquidator C/- PPB Level 46 MLC Centre 19 Martin Place SYDNEY NSW 2000 Phone: +61 2 8116 3000 Facsimile: +61 2 8116 3111 REPORT TO CREDITORS PURSUANT TO SECTION 439A OF THE ACT LEHMAN BROTHERS AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) ACN 066 797 760 ANNEXURE C Form 532 - Proxy FORM 532 Corporations Act 2001 Regulation 5.6.29 APPOINTMENT OF PROXY LEHMAN BROTHERS AUSTRALIA LIMITED A.C.N. 066 797 760 (IN LIQUIDATION) I/We (1) ……………………………………..…………………………………… a creditor of Lehman Brothers Australia Limited appoint (2)……..……………..….…………………....................................…………............... or in his/her* absence ..................................................…………………………………..as *my/*our *general/*special proxy to vote at the meeting of creditors to be held on 5 January 2010 at 11:00 a.m. A.E.D.S.T. or at any adjournment of that meeting, and to vote: *generally as he/she determines on my/our behalf OR *specifically in accordance with the following special instructions below (3) For Against Abstain 1. To approve the remuneration of the Deed Administrator and Liquidator for the period 18 September to 30 November 2009 in the amount of $544,279.00 plus GST. 2. To appoint a Committee of Inspection. I*/We* authorise .......................................................................................................................... [insert name and address of person authorised] to represent me*/us* on the Committee of Inspection should one be elected. Dated this ............................. day of .................................. 20 The common seal (4) of ...................... was affixed hereto in the presence of OR ....................................................... (Signature (5) of individual or ......................................... .............................. person authorised (6) by corporate Director/Secretary Director resolution to represent corporation) CERTIFICATE OF WITNESS (special cases (7)) I, ................................................................... of ................................................................... certify that the above instrument approving a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him/her* before he/she* attached his/her* signature or mark to the instrument. Dated this ................................. day of ........................ 20 Signature of witness .................................................... Description ................................................................ Place of residence .....................................................………………………………………………………………………… *strike out if inapplicable Notes: 1. If a firm, strike out “I” and set out the full name of the firm. 5. The signature of the creditor, contributory, 2. Insert name, address and description of person appointed. Debenture holder or member is not to be attested 3. If a Special Proxy, tick either “to vote for” or “to vote to by the person nominated as proxy against” the resolution 6. Corporations Act Sec 250D. 4. The method of affixing the common seal should be 7. This certificate is to be completed only where the prescribed by the creditors’ Articles of Association. person giving the proxy is blind or incapable of writing. Form 532. REPORT TO CREDITORS PURSUANT TO SECTION 439A OF THE ACT LEHMAN BROTHERS AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) ACN 066 797 760 ANNEXURE D Form 535 – Formal Proof of Debt or Claim Ref: PUBALPI:AMS:C/CRS FORM 535 Subregulation 5.6.49(2) Corporations Act 2001 LEHMAN BROTHERS AUSTRALIA LIMITED FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM) To the Joint and Several Administrators of Lehman Brothers Australia Limited: 1. This is to state that the company was on 26 September 2008 and still is, justly and truly indebted to: 1 .................................................................................................. ABN ....................................... for ..........................................................................................dollars and .................................... cents. Particulars of the debt are: 2 3 4 5 Date Consideration Total Inclusive of GST Remarks GST amount of $ $ 2. To my knowledge or belief the creditor has not, nor has any person by the creditor’s order, had or received any satisfaction or security for the sum or any part of it except for the following6: Date Drawer Acceptor Amount Due Date $ *3. I am employed by the creditor and authorised in writing by the creditor to make this statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied. *3. I am the creditor’s agent authorised in writing to make this statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied. DATED this day of 2009 Signature ................................................. Occupation ................................................... Name ................................................. Daytime Telephone ................................................... Address ................................................. Email Address ................................................... ........................................................ OFFICE USE ONLY ADMIT $ REVIEWED BY: GST INCLUDED ABOVE $ AUTHORISED BY: REJECT $ Date entered: / / WITHDRAW $ CONSIDERATION $ AMT. Per RATA $ TOTAL PROOF $ DIRECTIONS * Do not complete this part, if this proof is made by the creditor personally. 1. Insert full name and address of the creditor, and if applicable, the creditor’s partners. If prepared by an employee or agent of the creditor, also insert a description of the occupation of the creditor. 2. Under “Consideration” state how the debt arose, for example “goods sold and delivered to the company between the dates of …………………………….”, or “moneys advanced in respect of the Bill of Exchange”. 3. Total amount is inclusive of GST 4. Notate separately the GST portion of the total amount 5. Under “Remarks” include details of vouchers substantiating payment. Notate separately the GST portion of the total amount. 6. Insert particulars of all securities held. Where the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, specify them in a schedule in the above form. OFFICE USE ONLY Ranking of Claim Tick Secured Priority Unsecured Type of Claim Tick RATA Additional Employee REPORT TO CREDITORS PURSUANT TO SECTION 439A OF THE ACT LEHMAN BROTHERS AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) ACN 066 797 760 ANNEXURE E Summary of Receipts and Payments for the period 26 September 2008 to 30 November 2009 Rece ipts and Paym ents 26 Se pte m ber 2008 to 30 Novem be r 2009 VOLUNTARY ADMINISTRATION PERIOD DEED PERIOD LIQUIDATION PERIOD 26 Septem ber 2009 to 11 June 2009 12 June 2009 to 1 October 2009 2 October 2009 to 30 Novem ber 2009 $ $ $ TRADING RECEIPTS Coupon Income 7,342,773.81 3,446,544.62 551,558.03 Dividends 48,698.37 15,758.48 31,424.66 Interest Income 2,132,968.38 748,000.91 342,766.50 Other Income 42,500.04 201.93 2,913.32 9,566,940.60 4,210,505.94 928,662.51 NON TRADING RECEIPTS Accounts Receivable (PreAppointment) 33,386.81 9,603.24 Bank Guarantee 4,598,022.00 Employee Loan Repayments 0.00 384,872.59 PAYG Withheld (Preferred Dividend) 0.00 1,722,996.72 Cast at Bank - 552 955 163 0.00 52,971.71 Securities / Derivative Maturity 28,960,000.00 2,050,000.00 Monies held in Third Party Trust on Appointment 4,400.00 Cash at Bank Citigroup 206 450 037 (pre appt a/c) 322,043.74 Cash at Bank Citigroup 206 450 045 (pre appt a/c) 44,944,016.48 Other Current Assets 3,080,127.36 94,230.95 Plant and Equipment 1,279,003.68 83,216,600.07 4,210,841.02 108,234.19 NONTRADING PAYMENTS Advertising (4,606.25) Appointee Costs (207,231.98) Deed Administrators Costs 0.00 (36,613.90) Appointee Fees (2,285,785.57) Deed Administrators Fees 0.00 (955,060.06) Liquidators Costs 0.00 (28,870.87) Bank Charges (807.50) (121.00) (67.00) Dividend for Preferred (Employee) Creditors 0.00 (5,469,830.90) Employee Loans (384,872.59) Bank Guarantee (4,598,022.00) Coupon payment (67,761.42) Document Storage (4,375.64) GST Control: GST Paid (Received/Payment) (153,963.00) 9,109.58 (1,436,514.00) Hire & Leasing (3,732.66) (2,887.50) (11,550.00) Legal Fees (1,973,579.76) (820,430.68) (260,479.48) Reimburse payment to LEHREHOLD* 0.00 (165,960.90) Mail redirection (913.50) Rent & Rates (1,100.00) Telephone & Fax (81.07) (24,581.34) Utilities expenses (12,037.02) Valuation f ee (33,000.00) (16,500.00) Securities Payment Reversal (68,000.00) Printing Costs (27,674.52) (3,242.80) Travel Expenses (4,604.09) (6,591.27) Custody Fees (7,891.94) (4,550.31) (2,885.49) (9,840,040.51) (7,480,761.08) (1,756,866.84) NET RECEIPTS AND PAYMENTS 82,943,500.16 940,585.88 (719,970.14) Opening Balance 0.00 82,943,500.16 83,884,086.04 Closing Balance 82,943,500.16 83,884,086.04 83,164,115.90 Notes * Monies deposited through a pre appointment account w ith Citi bank in company name w ere attributable to Lehman Brothers Australia Real Estate Holdings Pty Ltd. These monies w ere repaid on 9 September 2009. REPORT TO CREDITORS PURSUANT TO SECTION 439A OF THE ACT LEHMAN BROTHERS AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) ACN 066 797 760 ANNEXURE F Administrators/Liquidators Remuneration Tables Client Name: LEHMAN BROTHERS AUSTRALIA LIMITED CALCULATION OF REMUNERATION PROFESSIONAL FEES INCURRED FOR THE PERIOD 18 SEPTEMBER 2009 TO 30 NOVEMBER 2009 Employee Position Rate (Ex Hrs Total Task Area GST) ($) Administration Hrs Assets Hrs Creditors Hrs Dividend Hrs Employees Hrs Investigation Hrs Trade On Hrs SINGLETON, NEIL Partner 710.00 155.05 110,085.50 27,512.50 38.8 9,514.00 13.4 41,748.00 58.8 - - - - 28,826.00 40.6 2,485.00 3.5 SIMS, TONY Partner 710.00 83.20 59,072.00 3,266.00 4.6 142.00 0.2 3,124.00 4.4 - - 142.00 0.2 52,398.00 73.8 - - ROBINSON, MARK Partner 710.00 1.40 994.00 994.00 1.4 - - - - - - - - - - - - LORD, BRETT STEPHEN Partner 710.00 0.10 71.00 - - - - - - - - - - - - 71.00 0.1 NOLAN, MATTHEW Director / Principal 645.00 28.00 18,060.00 - - - - - - - - - - 17,092.50 26.5 967.50 1.5 BLOCK, PETER Director / Principal 645.00 0.50 322.50 - - 322.50 0.5 - - - - - - - - - - GUNSON, PAUL Director / Principal 645.00 0.10 64.50 64.50 0.1 - - - - - - - - - - AYRES, MARCUS Director / Principal 645.00 236.50 152,542.50 3,483.00 5.4 25,090.50 38.9 41,989.50 65.1 2,257.50 3.5 - - 73,465.50 113.9 6,256.50 9.7 HATFIELD, CHRISTOPHER Senior Manager 555.00 8.25 4,578.75 - - - - - - - - - - 4,578.75 8.3 - - HOGAN, MICHAEL Senior Manager 555.00 86.30 47,896.50 5,938.50 10.7 17,926.50 32.3 555.00 1.0 - - - - 22,477.50 40.5 999.00 1.8 EVANS, MARK WAYNE Senior Manager 555.00 11.40 6,327.00 1,498.50 2.7 - - 4,551.00 8.2 - - - - 277.50 0.5 - - KHO, JULIE Supervisor 405.00 0.20 81.00 81.00 0.2 - - - - - - - - - - DUGGAN, ADAM Supervisor 405.00 65.80 26,649.00 12,051.00 29.7 810.00 2.0 8,302.50 20.5 243.00 0.6 607.50 1.5 4,230.00 10.5 405.00 1.0 CHANG, GARETH Senior Analyst 1 340.00 2.20 748.00 204.00 0.6 - - - - - - - - 544.00 1.6 - - JACKSON, ROSS Senior Analyst 1 340.00 2.00 680.00 680.00 2.0 - - - - - - - - - - - - BRAZIER, WARWICK Senior Analyst 1 340.00 16.50 5,610.00 - - - - 5,610.00 16.5 - - - - - - - - PANG, CAROL Senior Analyst 2 320.00 84.90 27,168.00 20,016.00 62.6 2,752.00 8.6 3,456.00 10.8 - - 112.00 0.4 - - 832.00 2.6 MAY, KELLY Analyst 1 285.00 21.00 5,985.00 5,928.00 20.8 - - 57.00 0.2 - - - - - - - - WYNNE, TOM Analyst 2 265.00 0.50 132.50 - - - - 132.50 0.5 - - - - - - - - HANNES, DAVID Analyst 2 265.00 0.30 79.50 - - - - 79.50 0.3 - - - - - - - - BASSIRI, FARNAZ Graduate 215.00 1.50 322.50 - - - - 322.50 1.5 - - - - - - - - GOLD, ROBERT Graduate 215.00 0.70 150.50 - - - - 150.50 0.7 - - - - - - - - DENNIS, MICHAEL Graduate 215.00 73.40 15,781.00 10,965.00 51.0 - - 4,644.00 21.6 - - - - - - 172.00 0.8 KIM, CATHERINE Graduate 215.00 189.00 40,635.00 8,170.00 38.0 8,213.00 38.2 2,150.00 10.0 12,835.50 59.7 21.50 0.1 3,870.00 18.0 5,375.00 25.0 FERNANDES, DWAYNE Graduate 215.00 0.30 64.50 - - - - 64.50 0.3 - - - - - - - - CRAWFORD, PETER Undergraduate 175.00 0.20 35.00 - - - - 35.00 0.2 - - - - - - - - MOSTAFA, MAG Bookkeeper 160.00 0.30 48.00 - - - - - - - - - - - - 48.00 0.3 WRIGHT, CHRISTINE PA 145.00 0.50 72.50 72.50 0.5 - - - - - - - - - - - - SCOTTON, KATE PA 145.00 2.90 420.50 420.50 2.9 - - - - - - - - - - - - SARE, GEMMA PA 145.00 22.85 3,313.25 3,313.25 22.9 - - - - - - - - - - - - SPELLMAN, CONAL Administration 130.00 100.00 13,000.00 2,782.00 21.4 5,239.00 40.3 143.00 1.1 - - 325.00 2.5 4,407.00 33.9 104.00 0.8 SLOANE, VIVIENNE Administration 130.00 22.10 2,873.00 2,873.00 22.1 - - - - - - - - - - - - RUIZ, SUSAN Administration 130.00 3.20 416.00 416.00 3.2 - - - - - - - - - - - - TOTAL 1,221.15 544,279.00 110,729.25 341.5 70,009.50 174.4 117,114.5 221.7 15,336.00 63.8 1,208.00 4.7 212,166.75 368.1 17,715.00 47.1 GST 54,427.90 TOTAL (including GST) 598,706.90 Average hourly rate (excluding GST) 445.71 Company Lehman Brothers Australia Limited Period From 18 September 2009 to 30 November 2009 Practitioners Neil Singleton and Stephen Parbery Firm PPB Pty Limited Administration Type DEED OF COMPANY ARRANGEMENT & LIQUIDATION A summary of the work undertaken throughout the conduct of the Administration of the company is detailed as below table: Task Area General Description Includes General Supervision Ensure all conditions of Deed are complied with, including statutory obligations. Attend and respond to Court proceedings regarding application to terminate Deed. Correspondence General correspondence inward. Document maintenance/file Monthly administration review. review/checklist Filing of documents. File reviews & Updating checklists. Administration Bank account Preparing correspondence opening and closing administration accounts re term deposits etc. Entering payments, processing receipts etc. Bank account reconciliations. ASIC Preparing and lodging required documentation with the ASIC, including notifications, accounts etc. ATO & other statutory Attend to GST reporting obligations. reporting Books and Records Dealing with records in storage, including listing records and other document management issues. Sending job files to storage Debtors Reviewing and assessing debtor claims for offsets Financial Assets Monitoring position of financial assets, including CDO’s. Instructing solicitors with respect to certain financial Assets assets and disputes regarding same. Related Party Debts Reconciling intercompany accounts. Preparation of claims against certain Lehman entities, including LBHI and LBSF for, amongst other matters, guarantee issues. Creditor reports Preparing report/updates to creditors advising of progress of administration. Creditor enquiries Correspondence with creditors on various matters. Dealing with proofs of debt Entering all claims into database and maintaining registers. Request and discuss with claimants further information regarding their claims. Creditors Reviewing intercompany accounts and liaising with relevant intercompany creditor to reconcile account. Litigation Creditors Attending to litigating claims and analysis of same. Correspondence and meetings with litigation creditors. Respond to various queries from litigations creditors. Attend and address Court proceedings with respect to the Wingecarribee matter. Processing Proofs of Debt Preparation of correspondence to potential creditors inviting lodgement of claims and intended declaration Dividend of dividends. Adjudicating on claims. Employee Enquiries Attend to all general employee queries regarding, Employees amongst other matters, tax issues. Conduct Investigations Reviewing historical records and commence more detailed investigation programme. Investigation Reviewing computer records and commence forensic searches on particular issues of concern. Custodian Account Management of custodian account issues with back Trade On office team, including coupon payment and management of small/irregular parcel issues.
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