* Settlement resolves intercompany claims between MF Global
* Former customers to receive another $500 mln-$600 mln in
By Nick Brown
NEW YORK, Jan 31 A bankruptcy judge on Thursday
approved a settlement under which many former MF Global
customers would get back 93 percent of the value of
their accounts, a major step in the wind-down of Jon Corzine's
Judge Martin Glenn greenlighted the deal at a hearing in
U.S. Bankruptcy Court in Manhattan, about six weeks after
trustees for MF's UK and U.S. broker-dealers, as well as its
parent, announced the deal to resolve billions of dollars in
"Needless to say, the court is very pleased," Glenn said.
"The result that everybody wants to see happen is the maximum
amount of funds possible being returned to the estate and being
distributed to customers."
The agreement avoids litigation in the UK that could have
dragged MF Global's liquidation out for years. It will allow
James Giddens, the trustee for MF's U.S. trader customers, to
return another $500 million to $600 million to those customers.
That would increase total payouts to about 93 percent of the
value of their accounts, from the 80 percent or so most have
recovered so far.
Customers who traded on UK exchanges have only received 5
percent recovery. The settlement will allow their payouts to
eventually increase to between 75 percent and 82 percent, James
Kobak, an attorney for Giddens, said at Thursday's hearing.
Interim distributions will begin "in the next few weeks,"
but it is unclear how long it will take for the full proceeds of
the settlement to reach customers, Giddens' spokesman, Kent
Jarrell, told reporters after the hearing.
MF Global, run by former Goldman Sachs head and New
Jersey Governor Corzine, collapsed in October 2011 when its
exposure to risky European sovereign debt spooked investors.
In addition to the claims of its many financial creditors,
trader customers were clamoring for money after regulators
discovered a hole in trading accounts valued at roughly $1.6
In a report last year, Giddens said MF Global
inappropriately used customer money to cover liquidity gaps as
it teetered on the brink. Corzine has denied any wrongdoing. He
and other former executives face civil claims from customers
over their role in the debacle, but have not faced criminal
Certain procedural conditions, including negotiations over
legal claims involving JPMorgan Chase & Co, must be met
before the settlement can become effective. Glenn asked the
trustees to turn in a progress report on those conditions in a
The trustees expect the conditions to be met, and Jarrell
said payouts will begin even before the settlement becomes
official, using reserve funds already in Giddens' possession.
The bankruptcy is In re MF Global Holdings Ltd, U.S.
Bankruptcy Court, Southern District of New York, No. 11-15059.
The brokerage liquidation is In re MF Global Inc, in the
same court, No. 11-2790.