A group of MF Global creditors on Thursday filed a comprehensive
plan of liquidation for the failed brokerage firm.
The proposal could pay back creditors of MF Global's general
estate within a year, and should restore the accounts of brokerage
customers to 100% within months, according to a person familiar
with the ad-hoc group.
In other words, the $1.6 billion shortfall once reported in
customer accounts will all have been paid back.
The Thursday night U.S. Bankruptcy Court in Manhattan filing was
made by an ad-hoc group of creditors led by Silver Point Capital,
Cyrus Capital Partners LP and Knighthead Capital Management LLC.
Those creditors own about 65% of MF Global's $2.2 billion in
unsecured debt, according to the filing.
Holders of about $1 billion in MF Global's unsecured bonds are
expected to recover between 12 cents and 42 cents on the dollar for
their claims under the plan, while those holding claims on a $1.2
billion revolving loan are expected to get more, between 27 cents
and 80 cents on the dollar.
However, in the filing, the creditors said these are
"conservative" estimates and that creditors may get back more.
The creditor group hopes to bring the plan before a judge at a
Feb. 14 hearing in Manhattan, although bankruptcy procedures call
for a several-step process to get it approved.
The filing comes less than a month after the court-appointed
officials liquidating three parts of MF Global reached a truce
designed to get customers their money back quicker.
That deal, between the trustee winding down MF Global's holding
company, U.S. Brokerage and U.K. arm, ended months of haggling
among the U.K. unit, James W. Giddens, the trustee unwinding MF
Global's brokerage, and Louis J. Freeh, who is in charge of the
holding company.
The Thursday filing was a next logical step after the December
deal.
Individual customers of MF Global's brokerage have received most
of their money back through a series of bulk transfers initiated by
Mr. Giddens and approved by the court. The plan filed on Thursday
is for general creditors of the holding company, who unlike the
brokerage customers aren't expected to recover all their money.
Mr. Giddens is winding down MF Global's broker-dealer business
under the authority of the Securities Investor Protection Act,
which governs the liquidation of failed brokerage firms. The
liquidation is separate from the bankruptcy case of MF Global
Holdings, the parent company, which filed for Chapter 11 protection
in a spectacular October 2011 collapse. That estate is now being
overseen by Mr. Freeh, a former director of the Federal Bureau of
Investigation.
Write to Joseph Checkler at joseph.checkler@dowjones.com.
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