Wingecarribee Shire Council has been unsuccessful in gaining access to Lehman Brothers Australia's (LBA) insurance documents in its bid to recover and protect around $30 million worth of investments.
On 19 May in the Federal Court of Australia, representatives for the council asked the court to continue proceedings for the purpose of seeking production of the insurance contracts.
Justice Steven Rares ordered that documents be produced and granted LBA a short period of time to appeal the decision.
On 22 May, Wingecarribee was advised that LBA had appealed and the matter was later heard before three Federal Court judges.
After hearing a complex legal argument the judges upheld the appeal by LBA's administrators, PPB, and denied the council access to the insurance documents.
Insurance policies are considered confidential but could be crucial to a creditor considering legal action, as they could reveal whether a legal claim is able to be pursued.
Wingecarribee took legal action against LBA, formerly known as Grange Securities, over collateralised debt obligations (CDOs) it bought because of the investment bank's financial advice.
The council incurred $2.55 million in losses over its $3 million investment in Federation CDOs in January 2008. Wingecarribee still holds $26 million worth of CDOs with different names, many of which have lost value.
Complications in the case arose after LBA was placed in administration and its parent filed for Chapter 11 bankruptcy protection in the US in September 2008.
Wingecarribee said it is exploring other options to recover its investments.
