MF Global Wants to Pay $925M to Creditors

Now that it has repaid the majority of its customers, MF Global Inc. wants the U.S. Bankruptcy Court in Manhattan to let it pay $295 million to its creditors. Most of the funds would go toward unsecured creditors, who would get a first distribution of approximately 20%. Holders of priority claims, as well as administrative and secured claims that were resolved, would get all of the money owed to them.

Giddens is also seeking to set up a reserve fund of over $400 for unresolved claims while placing a cap on how much each claim would get. MF Global has paid back the majority of its customers. Most of them got everything owed to them.

The brokerage firm and parent company MF Global Holdings Ltd. went into crisis when investors left after finding out that Jon S. Corzine, the CEO at the time and formerly a Goldman Sachs (GS) chairman and ex-governor of New Jersey, made big bets on European sovereign debt. Their departure created an approximately $1.6 billion shortfall in the accounts of customers that should have been kept separate from the firm’s money pool. The shortfall has since been recovered.

Meantime, a judge has ordered PricewaterhouseCoopers (PwC) to face a $1B lawsuit filed against it by MF Global’s bankruptcy plan administrator. The company is accused of giving the financial firm poor accounting advice that purportedly played a key role in MF Global Holdings Ltd. having to file for bankruptcy protection in 2011.

The district judge said PwC’s advice on “repurchase-to-maturity” transactions, which former MF Global head Jon Corzine used to purchase $6.3 billion of European sovereign debt, impacted the way the firm put into effect its strategy. The latter was a factor in the alleged losses. Marrero said that there is a plausible claim that PWC proximately caused harm to the firm.

In other MF Global news, Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan has decided that Corzine and other ex-executives of the firm can use more insurance money to cover their legal bills. He set a $55 million soft cap while stressing that he is not pleased about the costs.

Several of the ex-executives are dealing with regulatory proceedings and civil actions related to the brokerage firm’s bankruptcy.The former MF Global executives have already spent around $47.5 million in insurance funds for such bills.

The ex-executives want to be able to access the insurance money without having to get clearance from the court. Glenn has not ruled on this matter.

MF Global’s administrator and bankruptcy trustee had opposed the former executives’ request. Also, MF Global customers have said that some of the insurance money should go to them.

Contact our securities lawyers today.

MF Global Seeks Permission to Repay Creditors, The Wall Street Journal, August 26, 2014

PwC must face $1 billion lawsuit over MF Global advice, Reuters, August 27, 2014

More Blog Posts:
Regulators Also At Fault in MF Global Debacle, Says House Report, Stockbroker Blog Fraud, November 16, 2012

$1.2 Billion of MF Global Inc.’s Clients Money Still Missing, Stockbroker fraud Blog, December 10, 2011

Ex-MF Global CEO John Corzine Says Bankruptcy Trustee’s Bid to Join Investors’ Class Action Securities Litigation is Hurting His Defense, Institutional Investor Securities Blog, September 5, 2012