MF Global Trustees Reach Deal

4798The court-appointed authorities liquidating divisions of MF Global Holdings Ltd. MFGLQ +7.14% agreed to settle long-running legal disputes in a move they said would help customers of the failed brokerage get their money back more quickly.
The bankruptcy trustees liquidating MF Global's holding company and brokerage struck a deal to resolve claims between those two estates, while a separate agreement between the trustee for MF Global's brokerage division and the administrator overseeing its U.K. arm aimed to end legal disputes that have lingered between the two for nearly a year, according to court documents filed late Friday.

"Resolving complex issues with these entities marks a critical milestone in administering the MF Global Inc. estate," James Giddens, the trustee appointed to unwind MF Global's brokerage unit, said in a statement.

The trustees have been locked in disagreements over competing claims on various pieces of MF Global's far-flung business, which held thousands of accounts that the firm's clients used to trade futures contracts and securities. The New York-based firm collapsed in October 2011 due in part to outsized bets on troubled European sovereign debt, and Mr. Giddens has estimated there is a $1.6 billion shortfall facing customer accounts.

The disputes between the court-appointed authorities have meant that only about 10% of the $2.5 billion collected by the U.K. administrator has been distributed to customers of MF Global, according to a statement from Richard Heis, the administrator liquidating MF Global's U.K. division. Resolution of that dispute means that between $500 million and $600 million would ultimately go back to the U.S. brokerage estate, according to the agreement.

Source: Wall Street Journal | JACOB BUNGE
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