ASIC steps into case of councils v Lehman

From the Sydney Morning Herald comes the report that attempts by the collapsed investment bank Lehman Brothers to shield itself from an array of lawsuits taken by aggrieved investors face a challenge from the corporate regulator.

The Australian Securities & Investments Commission has intervened in the battle between local councils and Lehman Brothers Australia. It has asked the Federal Court judge hearing a dispute between councils and the bank for leave to make submissions in the case.

It wants the court to clarify the law surrounding deeds of company arrangement; specifically, whether a deed can compel creditors to release third parties, such as an international parent company, from liability.

Lehman Australia had sold billions of dollars worth of collateralised debt obligations to local councils and charities. Many of these complex financial instruments are now worth a fraction of their former value and some councils are seeking compensation.