INVESTORS in Minibonds hoping to get some of their money back face possibly delays of more than two years while teams of lawyers fight it out over complex legal issues, it was disclosed yesterday.

It is feared that the process of unwinding the failed investment product will be put on hold while the cross-border legal wrangle plays itself out.

The warning came yesterday from the Minibonds trustee - HSBC Institutional Trust Services Singapore - and the receivers, PricewaterhouseCoopers.

In a series of Frequently Asked Questions or FAQs posted online yesterday for investors, the two firms raised the possibility that lawyers involved in bankruptcy proceedings for the bankrupt Lehman Brothers may throw a spanner in the works.

The American investment bank was the issuer for the structured investment.

The FAQs said that investors may have to wait 'at least two years or more' before they can expect to see any light at the end of the tunnel, depending on the resolution of the legal and technical issues surrounding the unwinding process.

The comments follow Tuesday's announcement from the trustee that proposals to restructure the notes have temporarily been ruled out, due in part to legal complexities that recently arose.

Series 1 and 5 to 10 of the notes have defaulted and will be unwound, while series 2 and 3 are expected to go into default soon. There is no series 4.

In the months ahead, the receivers will unwind the underlying levels of swap agreements in the notes and discharge any resulting liabilities due to Lehman.

The receivers will also transfer the collateral - this consists of US corporate bonds held by two special purpose vehicles in the Cayman Islands - to Minibond Limited, the entity formed by Lehman to issue the notes.

People familiar with the matter told The Straits Times that if the receivers succeed in both tasks, the option of restructuring Minibonds may be revived. This means investors could have the choice of holding the notes to maturity.

Sources also confirmed that the three white knight financial institutions that were part of the initial restructuring negotiations are still keen to play a part.

Alternatively, the corporate bonds held as collateral could also be sold and the proceeds distributed to the relevant parties including investors.

Read the full story in Thursday's edition of The Straits Times.