MF Global Trustee's U.K. Repo Claim Disputed by KPMG

MF Global Holdings Ltd. (MFGLQ)’s U.K. administrators asked a judge to settle a dispute with its New York brokerage arm over internal trades that allowed the company to buy distressed sovereign bonds before it collapsed.

James Giddens, the U.S. bankruptcy trustee for MF Global Inc., claims the U.K. subsidiary owes about 287 million pounds ($458 million) to settle internal repurchase agreements on Irish, Portuguese and Spanish sovereign debt, according to court documents provided by its lawyers. KPMG LLP, which is winding up the U.K. unit, says it only owes about $60 million.

Judge David Richards in London will decide which side gets to value the claim following a two-day court hearing.

MF Global Holdings filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls and bank demands for money at its brokerage following its investment in the debt of troubled European economies.

Disputes between MF Global’s U.K. administrators and the various trustees of the U.S. entities must be resolved by judges before about $1 billion can be returned to clients or creditors.

KPMG spokeswoman Sorrelle Cooper declined to comment. Will Browne, a spokesman for Giddens, declined to immediately comment by e-mail.

Repurchase agreements are contracts under which a party agrees to sell securities and buy them back at a later date. Repos can be used as a type of loan, or to move risky assets off a balance sheet.

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net