Investor Protection in Lehman Brothers’ Insolvency Litigation

Lehman Brothers Holdings Inc. (Lehman or LBHI) filed for Chapter 11 bankruptcy in the United States (the US) Bankruptcy Court on 15 September 2008. It was the largest ever bankruptcy in the world, involving pre-filing assets of US$691 billion. The bankruptcy of Lehman proved to be a complex and lengthy process with global ramifications — Lehman's bankruptcy filing has resulted in at least 75 separate legal proceedings adjudicated by tribunals in nine countries. In the United Kingdom (the UK), Lehman's bankruptcy spawned much highly-publicised litigation which were initiated by clients and investors in the light of the firm's insolvency. This article uses the recent UK Supreme Court (Supreme Court) ruling in In the matter of Lehman Brothers International (Europe) (In Administration) and In the matter of the Insolvency Act 1986 [2012] UKSC 6) (‘the Lehman Supreme Court case') as the basis for exploring the mercurial concept of ‘statutory trust' in relation to client money in the event of a firm's insolvency