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MF Global Customers to Get Increased Payments

Source: WSJ

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Posted on 11 Jan 2013 by Neilson

MF GlobalCustomers of MF Global Holdings Ltd. will get a significant chunk of money back in coming months, according to projections made by a trustee in a court filing made public Thursday night.

Trustee James Giddens, who represents customers of the failed firm's brokerage unit, said in the filing that MF Global customers in the U.S. who invested on domestic exchanges could receive up to 93 cents on the dollar of their cash back, according to the filing in the U.S. Bankruptcy Court in the Southern District of New York.

That payment, an increase from the current estimated payment of about 81 cents on the dollar, stems from a December agreement Mr. Giddens reached with the U.K. bankruptcy administrator for MF Global's London unit and the trustee for MF Global's parent company, Louis Freeh.

Mr. Giddens' filing also projected that customers of MF Global's U.S. brokerage who invested overseas would see their payments increase to 47 cents on the dollar, with a potential future payment that would increase their overall recovery of assets to a range of 68 cents to 74 cents on the dollar.

Customers of MF Global, run by former New Jersey Governor and Goldman Sachs Group Inc. Chairman Jon S. Corzine, lost cash that they left at the brokerage firm when it collapsed in October 2011. Various trustees have been working to recover assets since then.

Also Thursday, a group of MF Global creditors filed a plan of liquidation for the failed brokerage firm. The proposal outlined a plan to pay back creditors of MF Global's general estate within a year, and should restore the accounts of brokerage customers to 100% within months, according to a person familiar with the ad-hoc group.

The Thursday night U.S. Bankruptcy Court in Manhattan filing was made by an ad-hoc group of creditors led by Silver Point Capital, Cyrus Capital Partners LP and Knighthead Capital Management LLC. Those creditors own about 65% of MF Global's $2.2 billion in unsecured debt, according to the filing.

If the creditors' plan materializes, the $1.6 billion shortfall once reported in customer accounts will all have been paid back. Earlier in the week, the U.K administrator also outlined plans for increased payments for MF Global's overseas customers. A bankruptcy judge will sort out the various plans and determine how much various customers and creditors will receive.



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