THE BRITISH administrator of Lehman Brothers Holdings is to ask creditors to sign contracts to get back as much as $8.9 billion (€6 billion) frozen after a judge rejected a similar plan.

The contracts would create an alternative to the so-called scheme of arrangement, allowing creditors to agree to a settlement, PricewaterhouseCoopers (PwC) said in a statement yesterday.

Lehman Brothers International Europe is appealing an August ruling from a London judge who said he did not have jurisdiction to approve the plan, which would have forced groups of creditors to abide by the agreement.

PwC had said the August ruling would delay payments to hedge funds and other creditors by as much as a decade.

Lehman filed the biggest bankruptcy in US history by assets listed in the petition on September 15th, 2008, stranding assets from hedge funds including GLG Partners.

“I’m hopeful that this would not be viewed as circumventing anything, but as a way to get the assets out efficiently while not compromising the rights of anyone who doesn’t participate,” said Owen Littman, general counsel of New York-based hedge fund Ramius, which is a member of Lehman Brothers Holdings’ creditors’ committee in the US.

PwC said it would pursue its appeal of the earlier court decision even as it promotes the alternate plan.

“The administrators are anxious that the appeal process should not lead to any unnecessary delay in the return of client assets,” PwC said.

“In parallel with the appeal process, they are developing alternative proposals that would also assist with the return of client assets.”

The “contractual solution” would allow creditors to reach agreements that might not be subject to court approval, PwC said.

The plan would “have substantially the same provisions as the draft scheme”, it added. – (Bloomberg)