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Australian investment groups settle losses in Lehman Brothers case

SYDNEY--Australian councils, charities and churches that lost millions of dollars on risky investment products during the global financial crisis have agreed a settlement, the liquidator of Lehman Brothers Australia said Tuesday.

Some 70 creditors involved in a class action against the subsidiary of the collapsed U.S. investment bank agreed to a deal Monday over around AU$170 million (US$154 million) in losses, PPB Advisory liquidator Marcus Ayres said.

“We've reached a settlement agreement, subject to court approval, with that group,” he said.

Ayres said PPB would also be making an application to effectively roll out the same claim resolution process for those 280-odd creditors that were not involved in the class action.

“If the court approves the settlement and the court approves our alternative dispute resolution regime ... then we hope we can start paying creditors out in March or April next year,” Ayres told AFP.

Bentham IMF, which funded the class action, also confirmed it had successfully negotiated a conditional settlement.

“If the conditional settlement is subsequently approved we expect our clients to be admitted for in excess of US$170 million and receive about US$85 million from the liquidator,” it said in a statement.

John Walker from Bentham IMF told broadcaster ABC that the 69 councils, churches and charities involved in the class action should expect to receive about half of the money they invested.

“The distribution from Lehman will only be around 50 cents on the dollar of their loss,” he said.

“We're seeking the other 50 cents from the ratings agency Standard and Poor's, which we say was responsible, collectively with Lehman.

“Our fee is around 35 cents in the dollar, and that would need to be taken out of the money to be received from Lehman and hopefully to be received from Standard and Poor's.”

Bentham IMF said if court approval was granted by the end of the year, distributions to Lehman creditors could begin in April and be finalized by mid-2014.

In September 2008 Lehman Brothers filed for bankruptcy, triggering panic among investors and causing lasting damage to the world economy.

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