Martin Lee @ Sg
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Minibond Restructuring No Longer Possible

Following the legal dispute which were raised by US lawyers on the unwinding of the Minibond, it appears that plans to restructure the Minibond has been derailed as well. 

HSBC Trust has updated their FAQ to address this:

Can you confirm the reports stating that any restructuring of the notes is not feasible for the time being?

Yes, although draft proposals have been made by interested parties the Receivers, in consultation with the independent advisers appointed by MAS in relation to the restructuring proposals, have ruled out any restructuring for the time being due to the legal complexities which are likely to be encountered in unwinding the notes and seeking to obtain control of the ultimate underlying assets. See answers to questions 14 and 19 for further details.

Can you confirm that the note trustee has received a notice from the lawyers of Lehman Brothers? What does it say and what are the implications? 

Yes, we have received a communication from Lehmans’ lawyers in the US which indicates, as a result of the Lehman bankruptcy, there could be legal challenges on behalf of Lehman relating to the documentation and the actions which need to be taken to unwind the notes both at the Minibond level and for those series in respect of which the underlying securities are underlying synthetic notes at the underlying level as well. This raises the possibility of prolonged litigation as part of the process which has to be taken by the Receivers to unwind the notes. We cannot comment further at this stage other than to say that the contingent litigation risk as referred to in the answer to paragraph 14 makes it impossible for the Receivers to make any kind of estimate of what value may ultimately be realised for noteholders and means that the overall process could take a considerable time.

Series 9 and 10 will face a less complicated process compared to the other series, as the underlying securities for these notes are corporate bonds and have no swaps. This means the ultimate collateral is more readily accessible to the Receivers and there are fewer aspects of the unwinding process which might be subject to being challenged by Lehman. Accordingly, the process may be somewhat shorter than for the other series.

Update from MAS

Fresh Woes for Minibond Holders (Today)

No Swift Solution for Lehman Minibond Holders (Channel News Asia)

Restructuring of Minibond on Hold (Business Times)

Expect 2 year Refund Delay (Straits Time)

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5 comments
Aaron says 10 years ago

So Lehman Brothers after conning so much of our money still reserves the right to prevent the receiver from terminating the swap agreements, (which is to protect the noteholders from further erosion of the value of the underlying securities or any further defaults in the derviatives). Just because they have angmo lawyers, they think they can bully us, the noteholders. We boycott all American goods and all American banks, plus the successors to Lehman Brothers in Singapore.

Reply
Jasmin says 10 years ago

lioninvestor,
So are the series 1-3 similar or different from series 9 & 10?
I felt hope was within reached earlier and now it is gone.

Reply
    lioninvestor says 10 years ago

    1-3 are different. They will be more difficult to unwind compared to 9 and 10.

    Reply
Jasmin says 10 years ago

I refer to the last paragraph of this post on “Minibond Restructuring No Longer Possible”.

I found a similar sentence in
http://sg.news.yahoo.com/cna/20081203/tap-737-lehman-minibond-holders-get-swif-231650b.html

In addition, this news from yahoo mentioned “Even though Minibond Series 1, 2 and 3 have not defaulted yet, they are expected to go into default soon and holders would face the same process as those who bought Series 9 and 10.”

Series 2 has defaulted since there was no coupon payout in late Nov.

I don’t know if series 1,2 and 3 have any swaps.

Reply
    lioninvestor says 10 years ago

    There was a mistake in the CNA article.

    Minibond series 1-3 are different from 9 and 10.

    Reply
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