MF Global Trustee Says 28,000 Customer Claims Completed

By Edvard Pettersson – Dec 5, 2012 12:01 AM ET

The trustee liquidating the failed MF Global Inc. (MFGLQ) brokerage said in a report that only 200 of more than 28,000 commodities and securities customer claims filed haven’t been completed in the past six months.

“The resolution of so many claims in such a short period has allowed clarity with respect to both the possibilities of, and impediments to, further distributions,” Trustee James W. Giddens said yesterday in an interim report filed in U.S. Bankruptcy Court in Manhattan.

The allowed 26,610 commodities customer claims have a total value of about $6.7 billion, according to the filing. Customers with allowed claims in the domestic futures account group, and who didn’t file objections to the trustee’s determination of their claims, have received about 80 percent of their account value under the first distribution, according to the filing.

Customers with claims in the foreign futures account group have received 5 percent of their account value so far, the trustee said. Future distributions are contingent on the resolution of disputes with the parent company, which is in Chapter 11 bankruptcy, and with MF Global’s London-based European broker.

“The trustee does not wish to understate the difficulties and complexities of some of the issues involved,” Giddens said.

“A pragmatic, constructive approach on the part of all the parties and professionals involved has allowed these discussions to enter an advanced and critical stage,” according to the report. “Successful resolution would, with court approval, permit further distributions.”

Assets, Debt

MF Global Holdings Ltd., the brokerage’s parent company, filed the eighth-largest bankruptcy on Oct. 31 after a $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations led to margin calls. Its bankruptcy filing listed assets of $41 billion and debt of $39.7 billion.

A trustee for the parent company, formerly run by Jon Corzine, has been unwinding that company under Chapter 11 of the U.S. Bankruptcy Code in an effort to repay creditors.

Giddens, the trustee for the failed brokerage, is separately liquidating MF Global Inc. assets to repay customers under the Securities Investor Protection Act. Each trustee has conducted his own probe into how the company failed and they have sometimes been at odds over whether certain sums belong to creditors or customers.

The case is In Re. MF Global Inc., 11-ap-02790, U.S. Bankruptcy Court, Southern District ofNew York (Manhattan).

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-07750, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Edvard Pettersson in Los Angeles atepettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net