On 8 October 2025, the Court approved a significant milestone in the long-running insolvency proceedings of Lehman Brothers International (Europe) (LBIE). After 17 years in administration, the Court granted an order terminating the administrators’ appointments and paving the way for LBIE to enter a members’ voluntary liquidation (MVL).

Why was an MVL the appropriate next step?

LBIE entered administration on 15 September 2008, following the collapse of Lehman Brothers. After years (and several extensions) the administrators’ term of office was due to expire at the end of November 2025.  However, there were a small number of residual claims and assets which were unlikely to be completed prior to that date.

Under the insolvency legislation it is usual for a company that has been in administration to be dissolved or for it to move into a creditors’ voluntary liquidation.  The court can also order the end of an administration, and in cases where the administrators have been appointed by the court (as they were in this case) this is the only way to do so.   The court has power to make any order it thinks appropriate. 

The administrators considered that the purpose of LBIE’s administration had been sufficiently achieved, and proposed the administration be terminated, that they be discharged from office and that the remaining surplus in LBIE’s estate be distributed through an MVL.  To enable that to happen Lehman Brothers Holdings Intermediate 2 (LBHI2), undertook to pass a resolution as soon as the administration terminated placing LBIE into MVL

The court considered that it was not appropriate for LBIE to be dissolved or placed into liquidation because LBIE was solvent but was satisfied that the purpose of LBIE’s administration had been sufficiently achieved and there was no reason for it to remain in administration any longer.

Although LBIE could have been returned to its directors the court thought that it ought to remain in a formal process and that it had jurisdiction to terminate LBIE’s administration on the basis of the undertaking from LBHI2 to place LBIE into MVL.

Comment

It will be a rare occurrence where a company at the end of an administration is solvent and can be wound up via the MVL process, but the outcome in this case demonstrates that the court has jurisdiction to make such an order should the circumstances arise.

A company cannot pass a resolution for MVL whilst it is in administration and therefore, as in this case, the mechanism for achieving that was for the shareholder to provide an undertaking to do so immediately upon termination.  

The solution provided a simpler and less expensive way of dealing with outstanding matters, compared to LBIE remaining in administration, and follows on from earlier cases in the Lehman’s administration where the court has been asked to deal with matters in a pragmatic way, and has done so.