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05 January 2018
Representative creditors of Lehman Brothers International (Europe) (in administration) (the "Creditors") appealed against decisions made in applications for directions by the joint administrators, in an attempt to receive as great a share of the £7.39 billion surplus from the administration as possible.
The Court held that, as per the Supreme Court decision in Waterfall I  EWHC 704 (Ch), there is a complete statutory code for interest recovery on proved debts in administrations and liquidations. The payment in full of a proved claim in an insolvency extinguishes a creditor's underlying contractual debt and replaces it with this statutory code. For the purposes of calculating the rate of statutory interest, however, contractual rights can be taken into account.
Interpreting rule 2.88 of the Insolvency Rules 1986 the court held, inter alia, that (1) statutory interest is calculated on the basis that dividends were first allocated to the payment of principal and then the payment of statutory interest and (2) in the absence of a legal wrong giving rise to a cause of action, there is no common law liability for the late payment of statutory interest.
For further information on this topic please contact Callum Macauley at Taylor Wessing by telephone (+44 20 7300 7000) or email (firstname.lastname@example.org). The Taylor Wessing website can be accessed at www.taylorwessing.com.
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