Litigation funder IMF (Australia) has agreed to provide funding on behalf of hundreds of Lehman Brothers Australia investors, including local councils and charities, over the losses from collateralised debt obligations (CDOs).
In a notice to the stock market, IMF said it will fund the litigation on behalf of CDOs investors, also including corporations, churches, universities and individual investors, which could reach up to 600.
Managing director Hugh McLernon said around 308 investors were directly involved with Lehman Bros Australia, however that number could double once other entities within the Lehman group and third parties were included.
He said the company is currently funding a Federal Court application to set aside a deed of company arrangement (DOCA) executed by the administrators of Lehman Bros Australia.
Mr McLernon said once the DOCA is removed, IMF will put together a group to pursue the Lehman companies and then a larger group will be put together to pursue the other entities.
He would not disclose which investors were involved with the new action and which Lehman entities and third parties would be pursued.
The City of Melville used to be advised by Lehman and in turn paid more than $20 million for a portfolio of CDOs.
It is holding seven CDOs that have experienced four or more credit events, which means the investments are moving towards default.
