MF Global, Bloxham, Saab, Weavering Capital, Rangers: Bankruptcy
A bid by MF Global Holdings Ltd. (MFGLQ)’s brokerage unit bankruptcy trustee to recover about $700 million in disputed assets will be determined in a London trial set for April 2013, according to a statement today from his office.
“It is crucial that this intellectual dispute over how property was or should have been handled be urgently resolved” so customers can get the money they’re owed, James Giddens, trustee for the liquidation of New York-based MF Global Inc., said in an e-mailed statement after a scheduling hearing.
Giddens sued KPMG LLP, the U.K. unit’s administrator, over MF Global customer funds held in London, saying they should have been protected and belong to American clients. KPMG said it wasn’t customer money and should be treated as a creditors’ claim.
Legal disputes between those winding up MF Global’s British and American entities have tied up about $1.1 billion of clients’ and creditors’ money, which can’t be returned until courts decide who controls the assets. MF Global Holdings filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls for its bets on European debt.
The trustee of MF Global’s parent company, Louis Freeh, has also filed a London lawsuit against KPMG seeking about $400 million from internal repurchase agreements used to move money around the company. KPMG spokeswoman Sorrelle Cooper didn’t immediately respond to a request for comment on today’s hearing.
Ireland’s Bloxham Faces Liquidation as Irregularities Probed
Bloxham, the Irish securities firm, secured the appointment of a provisional liquidator after it suspended operations amid a probe by the country’s central bank into accounting irregularities.
The company faces a capital shortfall of 5.3 million euros ($6.6 million), Bloxham’s lawyer, Bernard Dunleavy, said in a Dublin court yesterday. The company’s liabilities exceed assets by 13.9 million euros, he said. Judge Kevin Cross appointed Kieran Wallace of KPMG as provisional liquidator.
Bloxham said in a May 28 statement that regulators are investigating the “reporting and accounting of the firm’s income, which was overstated over a number of years.”
No client funds are involved or at risk, the stockbroker said. Tadhg Gunnell has been removed as the firm’s finance and compliance partner, Patrick Dempsey, another partner at Bloxham, said in an affidavit filed in court yesterday. Calls to Gunnell’s home telephone numbers and an e-mail weren’t returned.
Youngman Said to Challenge China-Japan Group With Saab Offer
Zhejiang Youngman Lotus Automobile has placed a fresh bid to buy bankrupt Saab Automobile for about 4 billion kronor ($552 million), a person familiar with the situation said.
The Chinese carmaker is bidding for Saab against a group led by Japanese investment firm Sun Investment and Hong Kong- based National Modern Energy Holdings Ltd., which builds and owns renewable energy power plants.
Saab filed for bankruptcy in December after running out of cash. General Motors Co. (GM) sold the Trollhaettan, Sweden-based company in February 2010 to the Dutch sports-carmaker Spyker NV. (SWAN) Saab hasn’t made cars since last year, after an initial production halt in March 2011.
Hu Ming, a spokesman for Jinhua, China-based Youngman didn’t immediately respond to a call and text message seeking comment. Hans Bergqvist, one of the bankruptcy administrators trying to sell the carmaker, didn’t immediately respond to a voice mail seeking comment.
Hedge Fund Founder, Ex-Employees Must Pay $450 Million for Fraud
Hedge fund Weavering Capital (UK) Ltd.’s administrators won a lawsuit to recover money from its founder Magnus Peterson and other former employees involved in sham derivative deals that caused its collapse.
Peterson and nine others, including his wife and deputy investment manager Edward Platt, must pay $450 million, Judge Sonia Proudman said.
“All of these defendants might find themselves bankrupt in the very near future” and the fund is unlikely to recover the money, Weavering’s lawyer Robert Anderson said.
Weavering’s administrators at MCR, a unit of Duff & Phelps Corp. (DUF), sued Peterson and the former employees to recoup losses caused when the fund collapsed in March 2009. Peterson told investors he achieved returns of as much as 12 percent a year, while he covered losses with fraudulent swap contracts, administrators said at a London trial last year.
Proudman said Peterson had breached his duties and acted deceitfully. Platt was negligent, but hadn’t committed fraud, the judge ruled. Peterson’s wife breached her duties as a director by approving the swap-trading strategy, Proudman said.
Rangers’ Creditors Will Recover Less Than 10%, Scotsman Reports
Rangers Football Club Plc’s unsecured creditors may recover less than 10 percent of the 55 million pounds ($84 million) they are owed, the Scotsman said, without saying where it got the information.
If the proposals, due to be voted on at a June 14 creditors’ meeting, are accepted, the U.K. tax authority will get back only about 2 million pounds of the 21.5 million pounds in unpaid taxes, the Edinburgh-based newspaper said.
Administrators Duff & Phelps published proposals on May 29 to allow the club to come out of administration by mid-July, the Scotsman said. The documents didn’t specify what proportion of the cash owed that creditors could anticipate recovering, the newspaper said.
The Creditors Voluntary Arrangement needs 75 percent approval by value or 50 percent in value of the creditors voting on the proposal, the Scotsman said.
Former U.K. Madoff Trustee Lawyer Gets Three-Year Sentence
A London lawyer who advised the trustee liquidating Bernard Madoff’s assets was sentenced to three years in jail by a U.K. court for fraudulently claiming 1.27 million pounds ($2 million) in expenses from his law firm, Hogan Lovells LLP.
Christopher Grierson, a former partner at the firm who advised on asset-tracing and fraud, admitted to making 57 fake travel claims, the Crown Prosecution Service said in March.
“It was well planned, it was sophisticated. It was a serious breach of trust,” Judge John Price said at a May 30 hearing in London. “But it is right to say that you have suffered from mental illness.”
Price said Grierson would serve half of his sentence. Grierson was fired from the law firm in May 2011 and subsequently repaid the money to Hogan Lovells. Grierson’s lawyer, Mark Ellison, asked the judge to take into account that his client suffered from a long-standing mental illness.
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