Peregrine Financial Group Inc.’s trustee agreed to settle a dispute with JPMorgan Chase & Co. in a deal that will bring more than $15 million to creditors of the commodities firm, which filed for bankruptcy after its founder looted client accounts.
Under the agreement filed yesterday in U.S. Bankruptcy Court in Chicago, JPMorgan will pay $1.25 million and release $14 million in cash it’s holding as collateral for its claim against Peregrine. JPMorgan also agreed to reduce the size of that claim, the trustee, Ira Bodenstein, said in the filing.
The deal “secures a favorable compromise that substantially reduces the estate’s costs and downside risk with respect to the JPMorgan claims,” according to Bodenstein.
Peregrine, a Cedar Falls, Iowa-based commodities firm with offices in Chicago, filed for bankruptcy to liquidate in 2012 after the National Futures Association said more than $200 million in customer funds were missing.
The firm’s founder, Russell Wasendorf Sr., now serving a 50-year prison sentence for fraud and embezzlement, stole mostly from customers who traded on U.S. exchanges, the trustee said.
A group of customers that had sued Wasendorf and JPMorgan for $200 million also agreed to be part of the settlement.
After the bankruptcy was filed, New York-based JPMorgan claimed Peregrine owed it $2.2 million.
Justin Perras, a spokesman for the bank, declined to comment on the trustee’s filing.
The case is In re Peregrine Financial Group Inc., 12-bk-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
To contact the reporter on this story: Steven Church in Wilmington, Delaware at email@example.com