The trustee liquidating the failed MF Global Inc. (MFGLQ) brokerage said only 200 of more than 28,000 commodities and securities customer claims filed haven’t been completed in the past six months.
“However, the size and timing of future distributions on customer claims remains dependent on the resolution of the major contingencies facing the trustee,” particularly disputes over claims with the brokerage’s U.K. affiliate and parent company, trustee James W. Giddens said yesterday in a report filed in U.S. Bankruptcy Court in Manhattan.
Giddens has paid U.S. and foreign customers almost $4.9 billion since the firm failed about 13 months ago, and has $1.2 billion in hand, out of $1.4 billion in remaining assets, according to data through Oct. 31 included in the report. Most of the money in hand must be kept in reserves because of the fights with affiliates and customers, Giddens said.
Commodity customers shouldn’t expect to get paid in full, unless Giddens wins the key legal battles, he said. A U.K. trial over his $911 million in client claims against the London-based unit is set for April.
Giddens, who also is liquidating the Lehman Brothers Inc. brokerage, lost a bid to claim $463 million in collateral from MF Global’s U.K. unit. The lawyer expects to sue insurers to try to recover $141 million in wheat futures losses by a trader in 2008, unless they agree to pay, he said.
He also has joined a lawsuit against executives including former New Jersey Governor Jon Corzine, who headed the parent company, and continues to negotiate to recover more money from JPMorgan Chase & Co., Giddens said.
“The trustee does not wish to understate the difficulties and complexities of some of the issues involved,” Giddens said.
The allowed 26,610 commodities customer claims have a total value of about $6.7 billion, according to the report. U.S. customers with allowed claims have about 80 percent of their assets, while those with foreign futures accounts have received only 5 percent, the trustee said.
MF Global Holdings Ltd., the parent company, filed the eighth-largest bankruptcy in October 2011 after a $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations led to margin calls. Its bankruptcy filing listed assets of $41 billion and debt of $39.7 billion.
A trustee for the parent company has been unwinding that company under Chapter 11 of the U.S. Bankruptcy Code in an effort to repay creditors.
Giddens is separately liquidating the brokerage to repay customers under the Securities Investor Protection Act. Each trustee has conducted his own probe into how the company failed and they have sometimes been at odds over whether certain sums belong to creditors or customers.
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).