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Bank Failure: Lessons from Lehman Brothers edited by Faber, Dennis; Vermunt, Niels (16th March 2017)

Part III Europe, 12 The Use of a Composition Plan as a Valuation and Distribution Framework

Dennis Faber, Frédéric Verhoeven, Niels Vermunt

From: Bank Failure: Lessons from Lehman Brothers

Edited By: Dennis Faber, Niels Vermunt

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.date: 27 May 2020

Subject(s):
Banks and cross-border issues — Bank resolution and insolvency — Regulation of banks — Securities lending — Security issuer

The commencement of chapter 11 proceedings in respect of Lehman Brothers Holdings Inc (LBHI) triggered the downfall of its intricate web of group companies around the world. The Dutch incorporated second-tier subsidiary Lehman Brothers Treasury Co BV (LBT) was declared bankrupt on 8 October 2008 – the largest bankruptcy case in Dutch history and unprecedented in Dutch insolvency practice. Various new features were tested (and approved by the court) in the LBT proceedings which could provide important lessons for future large insolvency cases of issuers of debt securities on the international capital markets. Despite the fact that the Dutch Bankruptcy Code dates back more than a century ago and was not designed for several complex issues which arose in the LBT proceedings, the chapter argues, it did facilitate a tailored made solution for an effective and transparent settlement of the affairs of the main treasury entity of the Lehman Brothers group.

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