Former clients of the European arm of U.S. investment bank Lehman Brothers, which collapsed in September 2008, may get cash back this year for the first time, although administrators warned legal struggles could still hold up the payment.

PricewaterhouseCoopers (PwC)
, which is working to return as much as 13.4 billion pounds ($21.3 billion) of cash and other assets to Lehman's European creditors and clients, said on Friday it hoped to make a first distribution to unsecured creditors this year.

The firm has gradually been raising money from assets of Lehman Brothers International Europe (LBIE).

But the administrator warned it could not guarantee the timing of the refund until it works through last month's High Court ruling on the rights of clients to claim monies.

The UK Supreme Court judgment has provided clarity with regard to the broad principles that are to be applied in determining client money entitlement and the constitution of the client money pool, PWC said in an emailed statement.

But the administrator added: It (the judgement) has not addressed the issues of detail and stated that such matters should be addressed by the UK High Court.

Britain's Supreme Court said late last month Lehman clients whose cash the U.S. investment bank had mixed with its own have the same rights as clients whose cash was kept separately or segregated.


The Supreme Court ruling is good news for clients with their money in non-segregated accounts, but effectively means a lower payout for segregated account holders, for whom it had always been clear they could claim their money back.

Financial firms are required to keep money they trade on clients' behalf separately from their own. Last month's court ruling said Lehman had failed to do this on a spectacular scale.

PWC warned on Friday: Given the challenges that remain affecting distributions in both estates, we cannot guarantee though that a first interim distribution ... will be paid before the current year-end.

The PWC caution will make grim reading for clients of MF Global , a smaller futures broker that collapsed at the end of October last year, as European administrator KPMG forges ahead with its efforts to return monies to MF Global clients.

Richard Heis, special administrator to MF Global, told Reuters after the court ruling last month: We now have a bit more certainty but there are still lots of grey areas and it looks likely a lot of the issues are going to need to be resolved by the court.

London Stock Exchange Group Plc said on Friday it had acquired MF Global's 2.4 percent of LCH.Clearnet as part of the British exchange's takeover of the clearing house, netting a further 13.6 million pound for creditors.

($1 = 0.6295 British pounds)

(Editing by David Holmes)