<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Claims against Lehman face uphill battle
</TR><!-- headline one : end --><TR>US bank's units here have funds, but recovery of cash will be complex process </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
</TD><TD vAlign=bottom>
Investors in Singapore who lost money from the failed Minibond products have till June 1 to lodge claims with the bankruptcy trustee in the United States. -- ST PHOTO: SAMUEL HE
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->LEHMAN Brothers units in Singapore may hold hundreds of millions of dollars, but people caught out with investment products linked to the failed bank will have a hard job getting their hands on the money.
Lawyers and bankers told The Straits Times yesterday that the complexity of laws surrounding subsidiaries set up here means any legal process will be lengthy, costly and of doubtful outcome.
The existence of the cash in two Lehman Brothers entities in Singapore was disclosed by the Monetary Authority of Singapore on Monday.
Lehman Brothers Pte Ltd has about US$298 million (S$437 million), while Lehman Brothers Singapore Pte Ltd holds about US$61 million. Both entities are related to Lehman Brothers Inc (LBI), which is now being liquidated.
Just where the funds might end up are far from clear given the tangled legal and fiscal issues that are in play.
But to the Singapore investors who lost hundreds of millions of dollars when Lehman-linked products were rendered worthless, news that nearly US$360 million lies in Lehman accounts here has raised hopes that they might get some of that cash back.
At first glance, it seems there is hope.
Lawyer Siraj Omar from Premier Law said: 'The significance of having some assets in Singapore is that if you have a valid claim against the entities, then you may have a chance to get access to the assets before creditors overseas.'
Under the Singapore Companies Act, Section 377, there is a provision for a liquidator of a foreign company that has operations in Singapore to recover the assets of the company here and pay the amount to creditors in Singapore first.
But it is not clear if that provision will apply in this case. The failed investment products Minibond Series 1, 2, 3, 5 and 6 were arranged by LBI and distributed by various banks here.
Investors who lost money have until June 1 to lodge claims with the bankruptcy trustee, which is in the United States.
Lodging such a claim raises a potential problem. It might imply the investor agrees the assets in Singapore should be shared with all other creditors of LBI, said lawyer Conrad Campos, the legal adviser to the Minibond Investors Action Group (MIAG).
That is a vast pool as it includes all thehuge investment bank's business parties.
If a claim is read this way by an American court, it would then affect any legal action the investor might want to take to secure assets in Singapore for Singapore investors only.
There is also the problem of what grounds a claim should take. As the investors were not LBI customers, the claim could include taking action against the bank as an arranger of the programme.
A claim could suggest that the bank had fallen short of certain prospectus requirements in terms of the disclosure.
But such claims against LBI for breaching its duties as an arranger will be 'highly contentious' as LBI would have sought legal advice to make sure the prospectus would comply with Singapore law.
Also, said Mr Campos, it is not just about whether there are assets here, but whether, after deducting for liabilities, there will be any left to distribute.
The MIAG said in a statement yesterday 'that it will be very costly to mount legal action in the US'.
'Apart from legal costs, the investor must consider the time, effort, expenses and logistical resources incurred in fighting an action in a distant jurisdiction.'
Other lawyers told The Straits Times that customers have different circumstances, which will add to the costs as each will have to seek legal advice.
The Securities Investors Association of Singapore has the links to the claim form on its website, and president and chief executive David Gerald pointed out that claims against financial institutions for mis-selling complex products were separate from any claims against LBI.
'There is nothing to lose by filing a claim, but it doesn't mean that the liquidator will accept your claim either,' he warned. [email protected]
</TR><!-- headline one : end --><TR>US bank's units here have funds, but recovery of cash will be complex process </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Investors in Singapore who lost money from the failed Minibond products have till June 1 to lodge claims with the bankruptcy trustee in the United States. -- ST PHOTO: SAMUEL HE
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->LEHMAN Brothers units in Singapore may hold hundreds of millions of dollars, but people caught out with investment products linked to the failed bank will have a hard job getting their hands on the money.
Lawyers and bankers told The Straits Times yesterday that the complexity of laws surrounding subsidiaries set up here means any legal process will be lengthy, costly and of doubtful outcome.
The existence of the cash in two Lehman Brothers entities in Singapore was disclosed by the Monetary Authority of Singapore on Monday.
Lehman Brothers Pte Ltd has about US$298 million (S$437 million), while Lehman Brothers Singapore Pte Ltd holds about US$61 million. Both entities are related to Lehman Brothers Inc (LBI), which is now being liquidated.
Just where the funds might end up are far from clear given the tangled legal and fiscal issues that are in play.
But to the Singapore investors who lost hundreds of millions of dollars when Lehman-linked products were rendered worthless, news that nearly US$360 million lies in Lehman accounts here has raised hopes that they might get some of that cash back.
At first glance, it seems there is hope.
Lawyer Siraj Omar from Premier Law said: 'The significance of having some assets in Singapore is that if you have a valid claim against the entities, then you may have a chance to get access to the assets before creditors overseas.'
Under the Singapore Companies Act, Section 377, there is a provision for a liquidator of a foreign company that has operations in Singapore to recover the assets of the company here and pay the amount to creditors in Singapore first.
But it is not clear if that provision will apply in this case. The failed investment products Minibond Series 1, 2, 3, 5 and 6 were arranged by LBI and distributed by various banks here.
Investors who lost money have until June 1 to lodge claims with the bankruptcy trustee, which is in the United States.
Lodging such a claim raises a potential problem. It might imply the investor agrees the assets in Singapore should be shared with all other creditors of LBI, said lawyer Conrad Campos, the legal adviser to the Minibond Investors Action Group (MIAG).
That is a vast pool as it includes all thehuge investment bank's business parties.
If a claim is read this way by an American court, it would then affect any legal action the investor might want to take to secure assets in Singapore for Singapore investors only.
There is also the problem of what grounds a claim should take. As the investors were not LBI customers, the claim could include taking action against the bank as an arranger of the programme.
A claim could suggest that the bank had fallen short of certain prospectus requirements in terms of the disclosure.
But such claims against LBI for breaching its duties as an arranger will be 'highly contentious' as LBI would have sought legal advice to make sure the prospectus would comply with Singapore law.
Also, said Mr Campos, it is not just about whether there are assets here, but whether, after deducting for liabilities, there will be any left to distribute.
The MIAG said in a statement yesterday 'that it will be very costly to mount legal action in the US'.
'Apart from legal costs, the investor must consider the time, effort, expenses and logistical resources incurred in fighting an action in a distant jurisdiction.'
Other lawyers told The Straits Times that customers have different circumstances, which will add to the costs as each will have to seek legal advice.
The Securities Investors Association of Singapore has the links to the claim form on its website, and president and chief executive David Gerald pointed out that claims against financial institutions for mis-selling complex products were separate from any claims against LBI.
'There is nothing to lose by filing a claim, but it doesn't mean that the liquidator will accept your claim either,' he warned. [email protected]
