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MF Global Judge Approves Settlement With U.K. Affiliate

February 1, 2013

Copyright 2013 Bloomberg.

Christie Smythe

MF Global Inc.’s settlement with a U.K. affiliate was approved by a U.S. judge, bringing the failed brokerage’s estate as much as $600 million.

U.S. Bankruptcy Judge Martin Glenn said Thursday at a court hearing in Manhattan that he was pleased with the deal, which will help boost recoveries for the former brokerage’s customers.

"The settlement is beneficial for the estate and fully satisfies the standards for approving settlements," Glenn wrote in an opinion filed after the hearing. Glenn said he will authorize MF Global’s liquidation trustee, James W. Giddens, to make distributions to customers.

The settlement resolves numerous claims stemming from extensive dealings between MF Global and affiliate MF Global U.K. Ltd., avoiding potentially lengthy and costly litigation, according to lawyers representing Giddens.

"It took substantial good-faith efforts, hard bargaining and a practical approach for all the parties to get to where they are today," James B. Kobak, a lawyer for Giddens, said during the hearing.

The settlement’s conditions include a requirement that some claims be channeled to the U.S. case and that JPMorgan Chase & Co. consent to releases involving the U.K. affiliate, according to Kobak. No objections were filed, Glenn said.

The brokerage and parent company MF Global Holdings Ltd. went into separate bankruptcies on Oct. 31, 2011. The parent is under control of a Chapter 11 trustee. Giddens was named as brokerage trustee by the Securities Investor Protection Corp.

The holding company’s Chapter 11 case is In re MF Global Holdings Ltd., 11-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The liquidation of the broker is In re MF Global Inc., 11-02790, in the same court. 

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