(Updates with statement in fourth paragraph.)
Nov. 15 (Bloomberg) -- The liquidator of broker-dealer MF Global Inc. asked a bankruptcy judge to approve a speedy claims process for former customers.
Trustee James Giddens is holding back about $1 billion of collateral from the defunct firm’s commodity customers, after distributing almost $1.6 billion, according to his website. He has said he can’t release the rest while money is missing from the accounts, and until he knows the size of claims that will be filed for the collateral.
MF Global customers have asked for their money in calls and letters to Giddens filed in court. Some said they need their collateral to run their businesses; others say they use their commodity accounts to pay their living expenses, according to some letters received by Bloomberg News.
“The initiation of the claims process does not prevent the trustee from exploring other means of accelerated relief for customer accounts,” Giddens said in a statement today. A spokesman, Kent Jarrell, declined to explain what forms of relief were being considered.
CME Group Inc., which runs a futures exchange, said last week it would provide $250 million in financial guarantees and $50 million in assets to allow the trustee to distribute more collateral.
Under bankruptcy law, assets must be shared equally among customers, Giddens has said.
The size of the “apparent shortfall” in customer funds still isn’t known, according to Giddens’s statement. His team is working with government officials, regulators and other investigators “examining the accuracy of bookkeeping at the broker-dealer” and trying to verify records, he said.
Commodity customers at the firm that was run by former Goldman Sachs Group Inc. co-chief executive officer Jon Corzine have a shortfall of about $593 million, according to a person with knowledge of regulatory probes into the firm’s failure.
MF Global Holdings Ltd., the New York-based parent of the broker-dealer, listed debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed Oct. 31 in Manhattan. The broker-dealer is being separately liquidated.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-cv-7750, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--With assistance from Tiffany Kary in New York. Editors: John Pickering
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