MF Global Singapore creditors face waiting game

SINGAPORE Mon May 28, 2012 7:15am EDT

SINGAPORE May 28 (Reuters) - The 6,000 customers of MF Global Holdings Ltd's Singapore arm should get well over 90 percent of their money back from the collapsed brokerage, although its creditors may have a tougher time recovering all they are due.

MF Global filed for bankruptcy in the United States on Oct 31, 2011 after a $6.3 billion bet on European sovereign debt spooked counterparties and investors.

Liquidators in Singapore have managed to recover $483.9 million of funds owed to the customers and company, but are still trying to claw back money that is tied up with other MF Global units overseas or frozen in foreign bank accounts.

"This is one of the biggest and most complex bankruptcies in Singapore because of the number of customers involved and the multi-jurisdictional nature of the business," said liquidator Bob Yap, a partner at KPMG, following a creditors' meeting in the city-state.

MF Global Singapore has already returned the highest proportion of customer money out of any of MF Global unit worldwide, but still needs to collect more than $50 million in outstanding funds. Getting hold of that, and money owed to the creditors, hinges on reaching agreements with its international affiliates and dealing with overseas regulators.

At the creditors' meeting, the liquidators said that if they succeed in getting outstanding money repatriated to Singapore, then customers should receive up to 97 percent of their money and the firm's creditors up to 91 percent.

However, if those funds are not returned, then creditors could only get 61 percent, although customers should receive around 93 percent.

"We are pleased that we've recovered much of what can be recovered and customers are getting most of their money back," said Yap.

Recovering value for the creditors could take several years.

One problem is the estimated $1.6 billion in missing customer money at MF Global's U.S headquarters, which vanished from their accounts as the company hurtled toward bankruptcy.

While the U.S. parent company only owes around $12 million to clients or creditors of MF Global Singapore, it owes more to other MF Global affiliates who in turn owe the brokerage's Southeast Asian arm.

So the 165 former employees of MF in Singapore may struggle to recoup all of the S$6.6 million ($5.16 million) they are claiming in unpaid wages, bonuses and expenses. They have each received a statutory payment of S$7,500 but will be treated as unsecured creditors for their remaining claims.

The cost of the liquidators in Singapore, which will come out of the funds recovered, has reached $15 million so far and is estimated to reach $35 million for the three-year period in which they are expected to be employed.