Following the filing for Chapter 11 bankruptcy in the United States by Lehman Brothers Holdings Inc., the ultimate parent company in the Lehman Brothers group, we have seen the following developments with the group entities in Hong Kong, which are not involved in the Chapter 11 proceedings. 
Hong Kong
The Lehman Group has 10 identified direct or indirect subsidiaries registered in Hong Kong.
On 16 September 2008, the Hong Kong Securities and Futures Commission (SFC) issued a Restriction Notice in respect of Hong Kong-based Lehman entities (Lehman Brothers Securities Asia Limited, Lehman Brothers Futures Asia Limited, Lehman Brothers Asia Limited and Lehman Brothers Asset Management Asia Limited). 
The Hong Kong Futures Exchange, a wholly-owned subsidiary of the Hong Kong Stock Exchange, has also suspended the trading rights of Lehman Brothers Futures Asia Limited in local markets after the afternoon session of 17 September 2008.
Both regulatory authorities are in discussion with the local management and are working closely to ensure an orderly winding down of Lehman's various positions.  
On 17 September 2008, the High Court appointed Paul Brough, Edward Middleton and Patrick Cowley (partners of accounting firm KPMG) as provisional liquidators of Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited.  Winding-up petitions have also been filed in respect of these two companies.
According to a statement by KPMG, its immediate focus will be to work with local management to better understand the current situation so as to best preserve the value of the Hong Kong business units.
The SFC has said that the appointment of provisional liquidators was the culmination of continuous dialogue between the SFC and Lehman.
The Secretary for Financial Affairs and the Treasury has indicated that the Hong Kong government will continue to closely monitor the matter.
A note on provisional liquidators in Hong Kong
Provisional liquidators (PLs) are normally appointed so as to preserve the assets of a company for the benefit of creditors during the period following the filing of a winding-up petition and the granting of the winding-up order.  The most common ground for seeking the appointment of PLs is a risk of dissipation of the assets of the company.  The court may vest a range of powers in the PLs for managing the affairs of the company and its assets and to continue the business in the ordinary course as appropriate. 
The full ramifications of the Lehman collapse will continue to evolve on a daily basis. JSM will provide you with updates on the Hong Kong / Asian / global position as matters unfold.  If you have any questions regarding this Client Alert, please contact Richard Tollan (at + 852 2843 4551 or or your usual Mayer Brown lawyer.

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