* Resolves potential hurdle to effecting MF Global payout plan
* Increases JPMorgan's projected recoveries to up to 76 pct
By Nick Brown
NEW YORK, March 13 (Reuters) - A bankruptcy judge on Wednesday approved a settlement that will increase JPMorgan Chase & Co's potential recoveries from the liquidation of MF Global Holdings to as much as 76 cents for every dollar in claims.
The deal resolves a complaint from JPMorgan over the value of an intercompany settlement among MF Global affiliates. That complaint had posed a potentially significant obstacle to getting creditor support and court approval for MF Global's payout plan.
In an order entered in U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn approved a supplement to the payback plan that raises the maximum projected recovery for JPMorgan for its $1.2 billion loan. Its recovery had maxed out at about 73 percent in an earlier version of the plan.
The settlement also provides for a slight increase in the size of JPMorgan's claim.
Creditors must vote on the plan later this month. It must then go before Judge Glenn for a final approval hearing, scheduled for April 5.
The supplement decreases the projected maximum payout for unsecured creditors of MF Global's finance unit to 34.4 cents on the dollar, down from 39 cents in the earlier plan.
There was little change for unsecured creditors of MF's parent entity, with a maximum projected recovery of roughly 34 percent of claims.
Commodity trader customers of MF Global's broker-dealer unit are expected to recover all of their money.
The judge's approval follows an agreement reached between the parties last week.
MF Global, run by former New Jersey Governor Jon Corzine, is liquidating after filing for bankruptcy in 2011. Regulators determined that the firm misappropriated money in customer trading accounts to cover liquidity gaps as the firm teetered on the brink. Corzine has denied any wrongdoing.
The company's creditor payout plan was proposed earlier this year by a group of its hedge fund creditors, led by Silver Point Capital, Knighthead Capital and Cyrus Capital Partners. Louis Freeh, the trustee liquidating MF Global's estate, cooperated with the hedge funds on later drafts of the plan.
JPMorgan, agent on the $1.2 billion revolving credit facility, filed claims against MF Global's parent and finance entities. Of the maximum 76 cent payout, up to 34.4 cents on the dollar would be paid by the parent, while the finance company would pay as much as 41.5 percent of its claim.
The case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.