Many councils and ratepayers may soon get up to half their money back, after the collapse of merchant bank Lehman Brothers short-changed them to the tune of millions.

An assembly of 69 charities, religious groups and councils are now a major step closer to resolution of their collective claim for around $180 million in damages.

The group allege they were burdened with useless derivatives when the Lehman bank collapsed during the Global Financial Crisis in 2008.

A separate class action backed by the same litigation fund is hoping to recover millions more from ratings agency Standard & Poors, which rated the derivatives as AAA investment grade.

The case is being eagerly watched by international financial interests, as its result could create a new precedent for the liability of ratings agencies.

The initial findings of Lehman’s liability by Justice Steven Rares in September 2012 raised an important question; asking how “relatively unsophisticated Council officers came to invest many millions of ratepayers’ funds in these specialised financial instruments.”

In a joint statement from the litigation fund and law firms, the final settlement in the Lehman fallout is “conditional now on the Federal Court approving separate applications: one from IMF clients for approval of the class action settlement and the other from Lehman’s liquidators for Court approval to their entry into the settlement agreement.”

“The applications are expected to be heard in December. If they are successful, distributions to Lehman creditors, including the 69 class action members, are expected to commence in April 2014 and run through to June 2014.”

A partner of the firm defending the councils said; “they were simply not in a position to understand the risks involved, including that of losing all of their money. It’s very pleasing today to have passed this major hurdle in having our clients’ claims resolved.”