London—Dentons has advised the joint administrators of LB Holdings Intermediate 2 Limited in the case of Lehman Brothers Holdings Scottish LP3 v. Lehman Brothers Holdings plc (and others) [2021].

The judgment, handed down on 20 October by the Court of Appeal, concerned the order of priority for payment of subordinated debt which was issued for regulatory capital purposes. The ruling rejects arguments made by one subordinated creditor that the different subordinated instruments should be paid pari passu. The appeal judges found that, on a proper construction of the terms of the instruments, some subordinated claims took priority over others. The decision may help unlock a large amount of funds for our clients, enabling them to make distributions to their subordinated creditors.

Partner Tessa Blank led on the matter with support from consultant Nigel Barnett and senior associate Jonathan Sears.

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