The administrator for Lehman Brothers, PricewaterhouseCoopers (PwC) is drawing up a plan to give out $17 billion of the defunct bank’s assets directly to creditors, it was announced today.

PwC’s original application to implement a scheme to return assets was turned down by the High Court at the end of August.

Pending an appeal later this month, PwC is drawing up a 'plan B' to return billions of dollars of assets to hedge funds and other investors by coming to a contractual agreement with the bank’s creditors.

A PwC spokeswoman said: “At the moment we have been able to return about $13 billion of $30 billion on a claim-by-claim basis, but this process will take a lot of time. We are getting people to sign up for contracts instead.

“We are looking to return house assets — such as shares — that Lehman were holding on behalf of hedge funds and the like, and get people to come forward and tell us what they are owed so we can sort out the mess.”

The High Court turned down PwC’s scheme because it found that there was no jurisdiction that could bind dissenting creditors to the agreement.

Steven Pearson, a partner at PwC, told the Wall Street Journal that he hoped to gain the support of “90 per cent" of creditors for the new scheme to reduce the risk of non-participating creditors filing claims against those who do take part in a standardised agreement.

PwC had planned to start giving out assets in the first half of next year, but this will be deferred to the second half of 2010 if the appeal is successful.

In case the appeal fails, negotiations will begin shortly with creditors, who will have until the end of this year to make claims on assets owed by the collapsed investment bank.

The scheme will only represent a small part of the ongoing efforts to sort through the ruins of Lehman, which filed for Chapter 11 bankruptcy protection in the US and fell into administration in the UK and continental Europe in September 2008.

A spokeswoman for PwC said: “There is still a lot more to do. This is just one element of returning assets — probably about a tenth — and has nothing to do with the wider creditor community.”

Full details of the proposal have been announced to creditors on the PwC website.

A statement read: “The Joint Administrators are developing a solution which would offer creditors the ability to voluntarily elect to benefit from the terms of a standardised settlement arrangement.

“The contractual solution would have substantially the same provisions as the draft scheme [turned down by the High Court], including a bar date, and deal with all aspects of determining the value of a creditor’s net equity, the allocation and the distribution of trust property that are dealt with under the draft scheme.”

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