A series of articles considering the legacy of the collapse of
Lehman Brothers on the financial industry across Europe and on the
development of legal principles
ARTICLE 1: The
EU Bank Recovery and Resolution Directive - Bringing Stability Back
to the European Banking Sector
Faced with huge losses in the subprime mortgage market, Lehman
Brothers Holdings Inc. (the ultimate parent of the Lehman group)
filed for Chapter 11 bankruptcy protection on 15 September 2008, a
momentous event which shortly preceded the collapse and break-up of
that group, including the filing for administration of Lehman
Brothers International (Europe), the main operating subsidiary for
the UK and Europe.
Looking back from the perspective of the sixth anniversary of the
collapse, its consequences still occupy the English courts with
numerous decided, settled, on-going and forthcoming cases. This
client update is the first in a series describing and analysing
the legal legacy of the Lehman collapse by looking at subsequent
changes to financial industry regulation in the UK and across Europe
to address the shortcomings highlighted by Lehman's collapse and
also considers certain key pieces of Lehman-related litigation in
the English courts and the principles which resulted from those
cases.
This first update in our 'Legacy of Lehman' series considers
the introduction of the EU Bank Recovery and Resolution Directive
("BRRD") which becomes mandatory across Europe on 1 January
2015. The lack of resolution tools available to relevant authorities
in order to rescue failing financial institutions was highlighted by
the collapse of Lehman and many other banks throughout Europe. The
BRRD seeks to address these inadequacies and the disparity with the
quality of legislation already implemented in different member
states across Europe. The common framework is intended to bring
stability and confidence back into the financial sector. To open the
client alert, click
here.
Subsequent articles in the 'Legacy of Lehman' series will focus
on topics from a European perspective, including:
- The development of legal principles relating to client assets
and the distribution of assets over which clients have proprietary
interests
- Issues relating to client monies litigated in the "CASS 7"
litigations
- The introductions of European Market Infrastructure
Regulations
- The litigation surrounding the correct application of the
surplus of funds in the administration of LBIE known as the
"waterfall" litigations
- Developments in relation to the interpretation of ISDA Master
Agreements following a number of derivatives-based
litigations
- The Lehman Brothers UK Pension Scheme litigations deciding
which group companies should financially support the under-funded
scheme
In addition, from the U.S. perspective we will
include an alert on aspects of the 'safe harbor' principles and the
U.S. bankruptcy court's treatment of derivatives.
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