MF Global payout plan approved for creditor vote
By Nick Brown | February 20, 2013 9:21 AM EST
A bankruptcy judge on Tuesday approved the outline of a plan by liquidators and creditors of failed brokerage MF Global
At a hearing in U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn green-lighted the outline, which was amended to address minor concerns Glenn had raised in refusing to approve an earlier version of the outline last week.
MF Global, which had been led by former New Jersey Gov. Jon Corzine, is liquidating after declaring bankruptcy in October 2011. Investors ran for the hills after the company revealed exposure to risky European sovereign debt.
The case became a political fire storm when regulators discovered an estimated $1.6 billion hole in the trading accounts of the broker's trading customers, later determined to be caused by the improper use of customer money to plug liquidity gaps.
Corzine resigned shortly after the bankruptcy, and has denied any wrongdoing.
Under the payout plan, the company's trader customers would be repaid in full. Louis Freeh, the trustee liquidating the MF Global parent, has agreed if necessary to support an effort by customers' trustee James Giddens to allocate some of the parent's assets to customer accounts to ensure their full recovery.
Unsecured creditors of the MF Global parent are projected to recover between 13.4 cents and 39 cents on the dollar, while creditors of its finance unit will receive between 14.7 cents and 34 cents on the dollar.
Creditors under a $1.2 billion loan, including JPMorgan Chase & Co
The latest version of the plan includes arguments, raised by JPMorgan earlier this month, that creditors may be getting undercut. A portion of the loan facility was transferred from MF's parent to its finance unit prior to bankruptcy, resulting in the finance unit owing money to both the holding company and the lenders. Eliminating that duplication could mean more recovery for the lenders, JPMorgan has argued.
Tuesday's approval paves the way for creditors to vote on the plan itself. Assuming they support it, the plan would go before Judge Glenn for final confirmation in April.
The proposal already has the support of a majority of unsecured creditors. It was put forth by Freeh in conjunction with a group of hedge fund creditors, led by Silver Point Capital, Knighthead Capital and Cyrus Capital Partners, who hold more than 65 percent of the company's $2.2 billion in unsecured claims.
(Reporting By Nick Brown; Editing by Nick Zieminski)
Most Popular Slideshows
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
- Malaysia Airlines MH17: Vital Black Boxes Finally Land in Hands of Malaysian Authorities, Rebels Announce Ceasefire (PHOTOS/VIDEOS)
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Moto 360 Price Speculations, Key Features, Strategic Release Date, Design: A Watch That is More Than Just Time
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- HTC Google Nexus 8 Release Date Imminent with New Nexus 7 Deals, Two New Tablets Soon
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air
- Upcoming iPad Mini 3 Could be 30% Thinner and Likely be Called iPad Mini Air; Apple Q3 Results Show 9% Decrease in iPad Sales