The decision, handed down on Friday, will be warmly welcomed by the 1000 small investors (some Australian), as well as Perpetual Trustees which represents them, after the UK Court of Appeal confirmed that small investors have priority over the bankruptcy trustee, Lehman Brothers Special Financing, in their claim for the notes.

Perpetual Trustee was represented in the action by Henry Davis York partners Scott Atkins and Alex Mufford, together with English lawyers from Sidley Austin.

The notes were frozen from Mahogany Capital following the Lehman collapse, and Perpetual Trustees has been engaged in a six-month legal battle to recover collateral which could be used to repay Mahogany noteholders.

While the decision is a win for investors, the war might not be quite over, with Lehman Brothers Special Financing having sought leave for an appeal to the UK Supreme Court, and separately moving to obtain a parallel judgment in the US. It is also not yet clear whether the collateral, which is now held by BNY Corporate Trustee Services, will be released.