The trustee liquidating MF Global Inc. (MFGLQ:US) will receive $130 million from CME Group Inc. out of a total of $175 million the exchange is freeing up to pay back the bankrupt brokerage’s customers and other creditors.
Commodity customers who traded on U.S. exchanges will get $65 million, with the same amount going to customers who traded on foreign exchanges, while non-customer creditors will get $16.5 million, trustee James Giddens said today in a statement. The money, belonging to MF Global and currently held or controlled by CME, will be returned under an agreement that requires a bankruptcy judge’s approval, with CME paying out some of it directly, he said.
“This agreement supports my goal to expeditiously resolve outstanding conflicts with parties as we work to recover and distribute as much customer property as possible as quickly as possible,” Giddens said.
More than $30 million of CME’s claims against MF Global will have a lower priority when it comes to getting paid than brokerage customers, he said. CME is the largest derivatives exchange in the world.
Giddens said in April he plans to distribute another $685 million to customers, which would bring them from 72 percent to about 80 percent of what they’re owed for funds missing from their segregated accounts. He has estimated that there’s a gap of $1.6 billion between the money available to pay them and what they’re owed.
Parent company MF Global Holdings Ltd. filed the eighth- largest U.S. bankruptcy on Oct. 31 with debt of almost $40 billion after making $6.3 billion in bets on sovereign debt and getting margin calls. The brokerage is being separately liquidated.
A hearing on the agreement with CME is scheduled for July 11 in U.S. Bankruptcy Court in Manhattan.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, 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).
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