By CONRAD TAN

THE sorry tale keeps getting new twists. Banks and other financial institutions that sold Lehman Brothers Minibond structured notes here will have to contribute to the cost of hiring lawyers to defend the interests of investors in the notes against claims by lawyers representing the failed US investment bank.

Earlier this month, HSBC Institutional Trust Services (Singapore) Limited, the trustee for the notes, warned that lawyers in the US acting for Lehman, which structured the Minibond products, could challenge the unwinding of the notes by the receivers at PricewaterhouseCoopers.

Any challenge is likely to result in a protracted legal battle. Meanwhile, the receivers cannot sell the underlying collateral of the Minibond notes.

Yesterday, MAS said that the receivers had hired senior lawyers. 'Distributors of the notes will pay for expenses incurred at this stage of the enforcement process as the collateral, from which the costs of enforcement would normally be recovered, cannot be freed up until the legal issues are resolved,' MAS added.

Last week, MAS hired Davinder Singh, senior counsel and chief executive of Drew & Napier, to advise it on the legal issues raised by the lawyers for Lehman in the US.

This article was first published in The Business Times on December 13, 2008.