Filing Of Claims By Minibond Investors Against Lehman Brothers Holdings Inc In The United States

SIAS recognizes that investors in the Lehman Minibond programme notes in Singapore may have queries on what this means for them. SIAS has prepared the following FAQs, based on publicly available information for your reference.

SIAS CANNOT GIVE LEGAL OR ANY ADVICE RELATING TO THE MERITS OF FILING THE CLAIM NOR ARE WE ENCOURAGING YOU TO FILE. YOU NEED TO SEEK ADVICE AS TO WHETHER YOU SHOULD FILE OR NOT.

SIAS DOES NOT PROVIDE ASSISTANCE TO HELP INVESTORS FILE CLAIMS AS WE DO NOT HAVE THE NECESSARY EXPERTISE.

FAQs

Q1: How is the 22 September 2009 claim deadline relevant to the Minibond Programme notes sold in Singapore? 

The 22 September 2009 is the deadline set by the United States Bankruptcy Court for the Southern District of New York for creditors to file their claims against LBHI and certain of its affiliates including LBSF if there are amounts owed by LBHI or any of its affiliates to them. Any claimant filing a claim for an amount linked to any derivative contract must also file a separate questionnaire by 22 October 2009.

In the case of the Minibond notes sold in Singapore, LBHI is the guarantor for the credit default swap transactions entered into between LBSF and Minibond Limited. As swap guarantor, LBHI guarantees that LBSF will meet all payment obligations to Minibond Limited under the credit default swap transactions.

Following the bankruptcy filing of LBHI and LBSF in the US, steps were taken by the receivers appointed by HSBC Institutional Trust Services (Singapore) Ltd, the trustee for the notes, to manage the enforcement process for the defaulted Minibond notes and to terminate the credit default swaps. SIAS understands from the FAQs published by the trustee that the swaps are in the money for LBSF and therefore, an amount is payable to LBSF by Minibond Limited upon termination. In other words, there are no payments due from LBSF or LBHI to Minibond Limited under the swaps. Accordingly, the trustee has stated in its FAQs that it has no contractual basis upon which it could file any proof of claim against LBSF or LBHI. The reasons for terminating the credit default swas are also set out in the FAQs.

Q2: SIAS previously mentioned a 1 June 2009 deadline for the filing of claims against Lehman in the US. How is the 22 September 2009 filing requirement different? 

The 1 June 2009 deadline related to the filing of claims against Lehman Brothers Inc (LBI). LBI is the arranger for Minibond Series 1, 2, 3, 5 and 6 notes sold in Singapore. As the arranger, LBI would have been responsible for, among others, structuring these series and preparing the pricing statements for them.

The 22 September 2009 deadline relates to the filing of claims against a different entity, LBHI and certain of its affiliates. In the case of the Minibond notes sold in Singapore, LBHI is the guarantor for the credit default swap transactions entered into between LBSF and Minibond Limited. Please see Q1 for LBHI’s role as swap guarantor.

Q3: What are the key factors I should consider when deciding whether to obtain legal advice or whether to file a claim? 

You need to have a basis to file a claim. LBHI is the swap guarantor for the Minibond notes and LBSF is the swap counterparty for the Minibond notes. You will need to show that LBHI and/or LBSF have payment obligations to you. In this regard, you may wish to note that LBSF’s contracting party and beneficiary of LBHI’s guarantee is actually Minibond Limited, and not noteholders themselves. Also, it is important for you to note that, based on the FAQs published by the trustee, the swaps are in-the-money for LBSF, i.e. there is positive monetary value for LBSF at the time of termination of the swaps. Therefore, an amount is payable by Minibond Limited to LBSF under the swaps, not the other way round. In addition, you should consider other issues, such as the costs involved in filing a claim in the US.

Q4: Where can I get more information on the claim process relating to LBHI and the current status of the Minibond Programme notes? 

You can refer to the FAQs by the trustee on its website at www.hsbc.com.sg

A copy of the Bar Date order as well as other up-to-date information with regard to court activity of the debtors can be found at www.lehman-docket.com

Q5: Should I file a claim against LBHI? 

SIAS is unable to advise investors whether and how to file a claim as these concern private civil claims. You will need to obtain your own legal advice on the course of action appropriate for your case, taking into account the need to prove your claim based on your individual circumstances. In this regard, investors are advised to consider the factors set out in Q3.