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
- Taylor Swift Named People's Best Dressed Stars Of 2014 [PHOTOS]
- Champions League Results: Barcelona Barely Escapes With A Win, Chelsea Fails To Hold On To The Lead [PHOTOS]
- Jeremy Lin, Kobe Bryant Among The Top 5 Overpaid Players In The NBA (Part 1 - Western Conference)
- Reasons Why Michael Jordan Is Better Than LeBron James [PHOTOS And VIDEO]
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
- 2 Reasons Nexus 6 Release Date is Worth the Wait: Android L Data Encryption & Material Design
- Unofficial ‘Samsung Galaxy Alpha’ Can Now Be Purchased For $700 In The US
- Google Now v. Siri v. Cortana – Comparison Of The Three Leading Virtual Assistants
- iOS 8 Jailbreak Release Update: Pangu Devs Will Outrace Evad3rs in Rollout of iPhone 6, iPad Unlocker
- Canada Consumer Alert: Costco No Longer Accepting American Express Cards Starting Jan 1
- Sony Xperia E3 vs. Moto G (2014) – Specifications, Features And Price Showdown
- Amazon Announces Kindle Fire HD 6, Kindle Fire HD 7 Tablets; Official Release Date Is Oct 2