NEW YORK - (Mealey's) The Securities Investor Protection
Act (SIPA) trustee in the MF Global Inc. (MFGI) bankruptcy on March 19
announced that he had reached a settlement agreement with JP Morgan Chase Bank
N.A. that will return $300 million to commodities customers who had money
invested with MFGI (In Re: MF Global Inc., No. 11-2790, Chapter 11, S.D.
MF Global Holdings Ltd. (MFGH), the parent company of
MFGI, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the
Southern District of New York in 2011. As an affiliate of MFGH, MFGI also
James W. Giddens was named the trustee regarding litigation
that arose under SIPA, as commodities customers who had invested money with
MFGI, sued the company following the bankruptcy.
On March 19, Giddens announced that he had reached a
settlement with JPMorgan under which the bank agreed to pay $100 million to be
made available for distribution to former customers. Furthermore, as a result
of certain lien releases included in the settlement, the trustee said he will
seek Bankruptcy Court permission to allocate an additional $200 million in MFGI
funds for distribution to customers.
The agreement provides for $100 million in additional
funds for the MFGI estate for distribution to customers and the return of more
than $29 million in proprietary MFGI funds held by JPMorgan to secure potential
obligations under a revolving credit facility agreement.
JPMorgan had previously returned more than $417 million
in MFGI proprietary funds to the MFGI estate, subject to certain liens and
set-off rights, the trustee said.
As part of the settlement, JPMorgan has agreed to release
the liens and set-off rights related to that $417 million, which will permit
those previously unallocated funds to be made available for MFGI's customers
and creditors, the trustee said.
The trustee said he will request authorization from the
Bankruptcy Court for the distribution of that $417 million by paying $250
million to former MFGI commodities futures customers who traded on U.S.
exchangesand $50 million to customers who traded on foreign exchanges.
The settlement agreement with JP Morgan also will release
substantial potential JPMorgan claims in the liquidation of MF Global UK Ltd.,
resulting in the return to U.K.
administrators of more than $90 million in assets held by JPMorgan.
Giddens is represented by Christopher Kiplok, James B.
Kobak and Sarah L. Cave of Hughes Hubbard & Reed in New York.MFGI is
represented by Kenneth S. Ziman of Skadden Arps Slate Meagher & Flom in New York. MFGH is
represented by Ziman, Steven J. Reisman of Curtis Mallet-Prevost Colt &
Mosle in New York and Daniel J. Fetterman and
Jeffrey R. Gleit of Kasowitz Benson Torres & Friedman in New York.
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