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Statement from the Office of the Trustee for the Liquidation of MF Global Inc.

 

NEW YORK, March 15, 2012 /PRNewswire/ -- James W. Giddens, the Trustee for the liquidation of MF Global Inc., today filed a motion with the United States Bankruptcy Court for the Southern District of New York seeking authority for additional distributions to former MF Global Inc. commodities futures customers who traded on US exchanges, and for a first distribution to former MF Global Inc. commodities futures customers who traded on foreign exchanges.

The Trustee is seeking authority for a distribution of up to approximately $600 million of customer property held as segregated by MF Global Inc. for its former commodities futures customers who traded on US exchanges (4d funds); up to approximately $50 million of customer property associated with commodity transactions in foreign markets (30.7 funds); and up to approximately $35 million of customer property to a domestic delivery class, which the Trustee has identified as consisting of physical customer property that has been or will be reduced to cash in any manner. 

So far, commodities customers have received approximately 72% of their 4d funds.  Because the Trustee has recovered only a small portion of 30.7 funds to date, customers have yet to receive any distribution of 30.7 funds.

The timing of the requested distributions is not currently known.  The Court has to first approve the request and, if approved, the distributions would not be in bulk.  The distributions would be made as part of the claims process and would occur on a rolling basis to individual commodities customers who filed claims by the January 31, 2012, deadline and have received and agreed to the Trustee's determination of their claims. 

"We believe that requesting an additional distribution is prudent and appropriate at this time and is consistent with our goal of returning as much customer property as possible, as quickly as possible, in a manner that is fair to all customers and that is consistent with the law," said Giddens.  "We will also continue our efforts to recover additional assets for the former customers of MF Global Inc. in an efficient manner."  

The Trustee is required by the law to distribute customer property on a pro rata basis by class of customer property, and this distribution would take into account the three previous bulk transfers to former commodities customers, which were based on the unaudited books and records of MF Global Inc.  While many claims have already been determined, the claims process is still underway and it is possible not all claimants will agree with the Trustee's determination.  In addition, the Trustee anticipates he will likely have disputes with MF Global UK Limited and other affiliated MF Global companies that have filed claims against the MF Global Inc. estate. Until disputed claims are resolved, it will not be possible to determine the precise percentage of former commodities customers' finalized claims that will be distributed through this proposed distribution, but the Trustee expects that the three bulk transfers to date plus this distribution will lead to commodities customers receiving:

  • Over 80% of each finalized claim for US commodities customers who traded on US exchanges;
  • Over 80% of each finalized claim for delivery funds;
  • Less than 10% of each finalized claim for US commodities customers who traded on foreign exchanges.

This distribution would still allow the Trustee to maintain a proper reserve of funds for each class of customer property, including a reserve of approximately $700 million for 4d funds, approximately $40 million for 30.7 funds, and approximately $10 million for delivery funds. The Trustee is required by law to hold an appropriate reserve until disputed claims against the estate are either resolved through negotiation or by the Court.

The Trustee has already distributed approximately $3.9 billion to former MF Global Inc. retail commodities customers who traded on US exchanges via three bulk transfers:

  • Within days of the bankruptcy, the Trustee received court approval for the transfer of 10,000 commodities customer accounts with three million open positions, along with approximately $1.5 billion in collateral associated with those positions at the time of the bankruptcy.  These open positions had a notional value of $100 billion.  A serious disruption in markets was avoided by the transfer. 
  • A transfer of 60% of the cash attributable to approximately 15,000 customer commodity accounts with cash only in the accounts, totaling approximately $500 million, was completed in November.
  • In December and January, a third transfer occurred that moved approximately $2 billion to restore 72% of US segregated customer property to all former MF Global Inc. retail commodities customers with US futures positions. 

At this time, the Trustee has mailed letters of determination to a majority of former MF Global Inc. commodities customers who submitted claims to the Trustee by the January 31, 2012, deadline.  Claims continue to be reviewed, and the Trustee will continue to issue determinations to claimants on a rolling basis.  The determination letter will acknowledge the claim and provide a determination as to whether the claim has been allowed, denied, reclassified, or is subject to further reconciliation or information requests.

Claimants who have questions about their letters of determination are encouraged to call the Trustee's dedicated Determination Call Center Hotline at 888-643-2169 (inside the United States) or 212-837-6038 (outside the United States).  By calling the hotline, claimants may speak with a representative of the Trustee to discuss and possibly resolve any difference between the amount that was claimed and the amount that the Trustee allowed.  The Trustee's goal is to resolve questions or disputes regarding determinations informally over the phone whenever possible.

The information in this statement does not apply to any other MF Global entity, including separate insolvency proceedings involving the parent company, MF Global Holdings Ltd.

SOURCE Office of the Trustee for the Liquidation of MF Global Inc.

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