Councils win Lehman court case

Councils and charities involved with Lehman Brothers Australia have had a win in the High Court today that paves the way for the group to proceed with legal action against the collapsed company.

Litigation funder IMF (Australia) today said the High Court dismissed an appeal against a Federal Court judgement that found the deed of company arrangement approved by creditors of Lehman Bros Australia was void and of no effect.

"It was argued by the Councils seeking to have the DOCA set aside that the DOCA was unfair and particularly prejudicial to the interests of those creditors with damages claims against Lehman Australia, principally being the local councils, charities and other investors in collateralised debt obligations marketed by Lehman Australia," IMF said.

"In particular, the councils argued that the DOCA could not contain terms which required creditors to release claims against other Lehman Group companies."

The High Court win now paves the way for the councils and charities, as clients of IMF to proceed action against Lehman Australia and other companies within the group.

The City of Melville was one council which used to be advised by Lehman and had paid more than $20 million for a portfolio of CDOs.