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Johnson Winter & Slattery, representing investors in 10 CDO Series issued under the A$2bn-plus Lehman sponsored Dante Notes Program, has secured a win for its clients against Lehman Special Financing (LBSF).

A decision in July by the Chancellor of the English High Court, Sir Andrew Morritt, upheld investors’ rights to recover securities and cash funded by their investments ahead of LBSF’s claims. However, LBSF appealed this ruling, which was dismissed last week.

The Court of Appeal held that LBSF’s claim to strike from the product documents the subordination provisions was not sustainable, because there was no infringement of the “anti-deprivation principle” underlying English insolvency legislation. Jim Hunwick, a partner at JWS, said that “this is a significant win for our clients who are determined to prevail against the aggressive steps Lehman entities in New York are taking to frustrate the orderly unwinding of CDOs”.

JWS worked alongside Lawrence Graham’s banking & finance litigation expert Jean-Pierre Douglas-Henry, while Richard Salter QC and Jonathan Davies-Jones of 3 Verulam Buildings appeared as counsel.

Similar proceedings are being considered later this month by the New York Bankruptcy Court, so this case is likely to continue to break new legal ground in relation to widely used financing structures and cross-border insolvencies.

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