UPDATE 1-Lehman Europe administrator has new asset plan

(Recasts with PwC statement, adds background)

*Administrator proposes alternate plan to dole out assets

*Says is still appealing in court for original plan

*Administrator plans to give back as much as $8.9 bln

By Emily Chasan and Tom Freke

NEW YORK/LONDON, Oct 5 (Reuters) - The administrator for Lehman Brothers Holdings Inc's LEHMQ.PK European unit on Monday unveiled a new plan to dole out the collapsed investment bank's assets directly to creditors.

The administrators, said they would put forward a "contractual solution" that would allow them to distribute "a very significant portion" of the $8.9 billion in securities assets currently under their control, according to a statement published on the administrators' website.

In August, a London judge rejected an earlier scheme of arrangement proposal from the administrators at PricewaterhouseCoopers [PWC.UL] that would have allowed them to dole out assets to clients. The administrators, who still view that earlier plan as superior, are appealing the decision and said on Monday that a request to expedite the appeal was granted. A hearing on the appeal is scheduled for Oct. 26.

The "contractual solution" plan proposed on Monday aims to expedite the process and work around the court proceedings, the administrators said.

"The Administrators are anxious that the appeal process should not lead to any unnecessary delay in the return of client assets," the PwC administrators said on their website on Monday.

Under the contractual solution, Lehman Brothers International Europe (LBIE) would circulate a contract document to prime brokerage counterparties and other creditors in November; and if a sufficient number of creditors signed on, the administrators would be allowed to distribute assets under the plan. The administrators proposed that all client asset claims be submitted by Jan. 31, 2010.

PwC expects to hold information sessions in New York and London on the plan for creditors, though it still hopes its original proposal will be allowed to go into effect after the court appeals process and that it will receive a favorable decision in November.

Tony Lomas, the top PwC administrator for Lehman's European unit, told the Reuters Restructuring Summit last week that the court did not have a problem with 90 percent of the proposed scheme. [ID:nLS352712]

The Wall Street Journal reported earlier on Monday that Steven Pearson, a partner at PricewaterhouseCoopers and joint administrator for Lehman's operations in London, said he hoped to gain the support of 90 percent of creditors for the alternate contractual solution, which would reduce the risk of nonparticipating creditors filing claims later against those who did participate. (Reporting by Emily Chasan in New York and Tom Freke in London; Additional Reporting by Biswarup Gooptu in Bangalore, Editing by Gerald E. McCormick)