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.
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)