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Published April 03, 2014, 12:03 PM

MF Global customers to recoup $6.7 billion as final payout starts

Former customers of MF Global Holdings Ltd.’s bankrupt brokerage will recoup all $6.7 billion they are owed following the completion of a payout that will begin on April 4, its trustee says.

By: Jonathan Stempel, Reuters

NEW YORK — Former customers of MF Global Holdings Ltd.’s bankrupt brokerage will recoup all $6.7 billion they are owed following the completion of a payout that will begin on April 4, its trustee says.

Nearly 26,500 former commodities and securities customers of the MF Global Inc. brokerage will share in the payout, which will be made over the next several weeks, says the trustee, James Giddens.

The payout comes nearly 2½ years after the parent company once run by Jon Corzine, who had previously been a co-chairman of Goldman Sachs and governor of New Jersey, filed for Chapter 11 protection.

It often takes customers and creditors of bankrupt companies years to recoup all or some of their money.

Lehman Brothers Holdings Inc., the Wall Street bank that filed for bankruptcy on September 15, 2008, on April 3 is returning $17.9 billion to creditors, boosting its payout so far to $80.4 billion in five distributions.

In November, U.S. Bankruptcy Judge Martin Glenn in Manhattan approved a plan to fully repay MF Global Inc. customers, including with money once earmarked for unsecured creditors who were not customers.

“Checks are going in the mail that will make all public customers of MF Global Inc 100 percent whole,” says Giddens, a Hughes, Hubbard & Reed partner who leads that firm’s corporate reorganization and bankruptcy group.

Some of the money going to former customers has come from settlements with onetime MF Global counterparties JPMorgan Chase & Co. and CME Group Inc. Additional funds may be received from a British unit, MF Global UK Ltd, Giddens says.

Giddens says 24,020 former U.S. commodities futures and options customers would recover $5.4 billion.

He says another $880 million would go to 2,047 former foreign commodities futures and options customers, and $376 million would be returned to 428 former securities customers.

MF Global collapsed amid worries about a $6.3 billion bet by Corzine on European sovereign debt and that money from customer accounts had been used to cover liquidity shortfalls.

Corzine and other former MF Global officials remain subject to other lawsuits by investors, customers and regulators.

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