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MF Global Debt Worth $325 Million Traded in March, Report Shows

MF Global Inc. was the second most actively traded bankruptcy case by dollar amount in March with $325.8 million worth of claims changing hands, according to a report.

Investors made 104 trades of customer claims in the defunct brokerage, with an average value of $3.13 million per claim, SecondMarket Holdings Inc. said in a report today. The most actively traded claims were those in Lehman Brothers Holdings Inc.

The claims trading market encompassed $6.2 billion worth of claims in March, an 88 percent increase from February, due in part from heavy demand from MF Global, the report said.

Andrew Gottesman, a director at SecondMarket, said the increased interest in MF Global was both a result of critical mass in the market and news.

“In March the trustee made a motion for an additional distribution,” he said. “People saw that as a positive development -- that there was more expected to be in the kitty.”

The trustee, James Giddens, said he would return another $685 million to commodity customers, giving some of them as much as 80 percent of their previously frozen assets. Since then, Giddens has said he also plans to pursue a lawsuit in the U.K. to recover another $700 million in customer funds.

Face Value

All amounts refer to the face value of the claims, not the trading prices, which reflect payment prospects and aren’t disclosed.

According to court filings, Jefferies Leveraged Credit Products LLC, VonWin Capital Management LP, and Longacre Institutional Opportunity Fund LP have been among the most active buyers of MF Global Inc. claims this month.

Lehman had $5.8 billion of claims trade hands, with 981 transfers and an average price of $5.9 million. The third-most actively traded bankruptcy case by dollar amount of claims traded was Motors Liquidation Co, where $41 million worth of claims changed hands, but only two transfers were made.

By number of claims traded, Lehman was first, and AMR Corp. was second, with 135 transfers of claims worth $1.4 million.

MF Global Holdings Ltd. (MFGLQ), the brokerage’s parent company, filed the eighth-largest U.S. bankruptcy in Manhattan court on Oct. 31 with debt of almost $40 billion. MF Global Inc.’s wind- down is being overseen under the Securities Investor Protection Corp. in the same court.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, 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: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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