Council happy to hear good news
LOCAL councils exposed to further losses from failed investments following last year’s global financial crisis received some good news yesterday.
Bean counters for Lismore City and Richmond Valley councils, which both copped heavy losses following the collapse of the Lehman Brothers bank last year, were cautiously optimistic after hearing the company had offered to cut a deal with its creditors.
Lismore City Council reportedly lost $791,000 while Richmond Valley Council’s losses were estimated about $500,000 when the bank collapsed.
Both councils were bracing for further bad news as their Collateralised Debt Obligation packages were wound up.
Lehman’s Australian offshoot has now been told by its US parent company it could unwind its debt securities to pay them an undisclosed sum ‘under certain conditions’.
Lehman Australia’s receivers, PPB, informed creditors this week about the confidential deal which could lead to better than expected returns to creditors.
Richmond Valley Council finance manager James Brickley said the news was positive, but until the Australian court action against Lehmans was resolved it remained ‘a wait and see proposition’.
Mr Brickley stressed the ‘paper losses’ had not put any pressure on council’s finances in the past year.
“What this means for Richmond Valley Council is not clear, nor has council been advised of any outcome,” he said.
A spokesman for Lismore City Council which, unlike Richmond Valley, is involved in the class action, agreed.
“The news of another deal is encouraging, however council first awaits the decision of the High Court and the advice of its solicitors before raising expectations,” he said.
GFC COUNCIL LOSSES
• Lismore City Council $791,000.
• Richmond Valley Council $446,100.