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During the course of the Lehman insolvencies it was discovered that the Lehman companies had used a number of different standard documents to record their terms of business which included provision for a security interest over the counterparty’s property. The important distinguishing feature of some of those security interests was that the relevant Lehman entity purported to take security not only for sums due to it but also for sums due to any other Lehman entity. Such security interests came to be known as ‘extended liens’—a label which is potentially misleading for an English lawyer because the security interests in question were more likely to be correctly characterized as floating charges. ‘Lien’ in this context is merely a generic term for different types of security interest. The chapter looks at the efficacy of extended liens.

This chapter discusses the law on creditor claims in England. The English courts have recently considered the ranking and priority of creditors on a number of occasions. The differing classes of claims found in the judgment of Lord Neuberger PSC in Re Nortel GmbH best explain how the distinction between ‘insolvency claims’, ‘administration claims’, and ‘non-enforceable claims’ is reflected in the applicable English rules. With the exception of expenses and shareholders’ claims, all the claims listed by Lord Neuberger are ‘insolvency claims’ because they are all creditors’ claims which are referable to pre-proceeding obligations. The remainder of the chapter deals with insolvency claims, administration claims, and non-enforceable claims in turn. Each section describes: the definition and scope of the claim; rules for submission, verification, and satisfaction or admission of claims; ranking of claims; and voting and other participation rights in insolvency proceedings.