The special administrators of MF Global UK have published a detailed document outlining the illustrative effect of the agreements made with the MF Global US entities on 22nd December 2012. It is important to note that the US settlements are conditional upon three factors: US Bankruptcy Court approval; the withdrawal of the MF Global Finance USA Inc claim and the withdrawal of one financial institution’s claim and return of funds to MF Global UK. Today’s illustration sets out a summary of the impact on the MF Global UK special administration if these conditions are met and the settlements become effective.
Richard Heis, joint special administrator of MF Global UK and restructuring partner at KPMG, commented: “On the basis that the conditions of the agreements made between MF Global UK and the MF Global US entities can be met, we expect to be able to increase payments to clients (customers with segregated accounts) from 26c to around 60c in the $1. The settlement of the litigation from the US entities also means we expect to be able to make an initial distribution of around 20p in the £1 to unsecured creditors*. The US agreements, if the conditions are met, will remove some of the larger obstacles to returning funds to customers; this will allow payment of the distributions set out today and pave the way for further distributions from both pools over the course of the year.”
The special administrators aim to make the payments to clients and creditors shortly after the conditions are satisfied and the settlement agreements become effective. However, it is not possible at this stage to give a guide on the timing of when the agreements will become effective. An updated illustrative financial outcome statement will be published following the US bankruptcy court hearing which is expected to be on 31st January 2013.
The special administrators’ illustrative report on the effect of the US agreements also shows a further improvement in the estimated outcome range, previously published on 31st October 2012. In terms of total funds available, the high end of the estimated range would see some $3.2bn of funds recovered (this is unchanged) while the low end of the estimated range would amount to some $3.1bn (previously $3bn). In terms of claims against these funds, the low end of the estimated range would amount to approximately $3bn (this is unchanged) while the high end of the estimated range would amount to $3.3bn (previously $3.6bn).
The illustrative report on the effect of the US settlement agreements is available in full at: www.kpmg.co.uk/mfglobaluk.
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For further information please contact:
Sorrelle Cooper, Senior PR manager, KPMG:
T: + 44 20 7694 8527
M: +44 7932 078218
Notes to Editors:
*For the purposes of clarity, the segregated pool is denominated in dollars and the unsecured pool is denominated in pounds sterling.
Richard Fleming, Richard Heis and Mike Pink of KPMG LLP were appointed joint special administrators of MF Global UK Limited, a UK based broker-dealer business, and MF Global UK Services Limited, which provides employee and pension services in relation to the UK operations, at 5pm on Monday 31st October 2011. MF Global UK Limited is a wholly owned subsidiary of MF Global Europe Limited which in turn is a subsidiary of MF Global Holdings Limited, a company incorporated in Delaware, USA, which filed for chapter 11 bankruptcy protection on 31st October.
The objectives of the administration are:
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.