In the English High Court, the joint administrators of four English companies within the former Lehman Brothers group sought directions from the Court in respect of a proposed settlement. The settlement would put to rest substantial inter-company claims including those at issue in the 'Waterfall III' proceedings.

Justice Hildyard applied the test that was recently summarised in Re Nortel Networks UK Ltd [2016] EWHC 2769 (Ch). That is, while administrators are mostly expected to exercise their own judgment in commercial matters, when the decision is 'momentous', the Court can be asked to give the administrators a direction permitting them to proceed with such a decision. The Court needs to decide whether what is proposed is within the power of the administrator, whether the administrator genuinely holds the view that what it proposes will be for the benefit of the company and its creditors, and whether it is acting rationally and without being affected by a conflict of interest in reaching that view. As the administrators satisfied the test, Hildyard J granted the applications for directions sought in respect of the settlement.

See the full case here.