NIBA - Celebrating 35 Years
Back to Journal
MF Global Updates

Judge Approves Significant MF Global Settlement and Customer Distributions

N
Written by
NIBA
Published
Reading time
2 min

On January 31, 2013, the judge presiding over the MF Global, Inc. (“MFGI”) bankruptcy approved a settlement between MFGI and its UK affiliate and also green-lighted further distributions.  The trustee indicated in court that he immediately will make distributions to bring non-affiliate 4d / domestic futures customers up to a 93% level of recovery and 30.7 / foreign futures customers up to an 18% level.  Additional recoveries should occur on behalf of 30.7 customers over time that the trustee expects will result in staggered distributions bringing 30.7 customers up to about 54% within a few months and then around 80% a little later.

Notably, the trustee and major creditors of MFGI’s domestic affiliates have indicated in a recent court filing that they now project 100% recovery for non-affiliate commodity customers.  Notwithstanding that projection from these highly sophisticated and engaged parties, the MFGI trustee appears to estimate a continued customer asset shortfall of several hundred million dollars subsequent to the aforementioned distributions.  If such a shortfall continues to exist then MFGI’s proprietary assets, which should be well in excess of that required to eliminate the shortfall, may need to be partly reallocated to customers to bring 100% distributions.  In theory a legal controversy may exist regarding whether such a reallocation should occur, but in reality the reallocation may not be contested because the largest general unsecured creditors of MFGI are domestic affiliates that have their own commodity customer claims against MFGI and that have also agreed in a separate settlement agreement to not contest such a reallocation.


Neal R. Stevens 

Of Counsel

nstevens@SRCattorneys.com

312 565.1045 tel (chi) |  212 334.7948 tel (nyc)

917 301.4744 cel  | 312 565.8300 fax


Read past articles by Neal R. Stevens:

 

The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

Stay Informed

Subscribe to the NIBA Journal for the latest insights and industry updates

Related Articles

View All
MF Global Updates

MF Global customers to be fully reimbursed, trustee says

Today marks the beginning of a $6.7 billion payout to the former customers of MF Global Holdings. The process is expected to take several weeks but will return all the money that is owed to the approximately 26,500 former commodities and securities customers of the failed brokerage. "Checks are going in the mail that will make all public customers of MF Global Inc. 100% whole," trustee James Giddens said in a statement. Read Full Article at FIA SmartBrief

MF Global Updates

Request for Comments – CPO/CTA Capital Requirement and Customer Protection Measures-Comments Due by April 15, 2014

NFA regularly reviews the continued effectiveness of its regulatory requirements. Over the past three years, NFA has issued 26 Member Responsibility Actions (MRAs), and 92% of those MRAs were against CPO and/or CTA Members. Most of these matters involved misuse of customer funds (including one CPO that improperly used pool funds because it had insufficient assets to operate as a going concern) and/or misstating net asset values and/or performance information. In light of these actions, NFA is reviewing the current regulatory structure applicable to CPO and CTA operations. In particular, NFA is looking at ways to strengthen the regulatory structure governing CPO operations to provide greater protection for customer funds. Additionally, NFA is exploring ways to ensure that CPOs and...

MF Global Updates

Peregrine Financial Trustee Seeks to Return $41 Mln to Clients

Peregrine Financial Group's bankruptcy trustee plans to return up to $41 million to former customers of the failed futures brokerage in the second payout since the firm collapsed 17 months ago. Court-appointed trustee Ira Bodenstein is seeking to return about 7 percent, or $27.5 million, to Peregrine customers who traded on U.S. exchanges, according to court filings. In the first payout last year, the group, which comprised the bulk of the firm's clients, received back about 30 percent of the money they had in accounts when Peregrine failed. Clients who traded on foreign markets would get back about 45 percent more of their money, or $13.5 million, in the second payout, court documents show. They received back about 40 percent...