November 18, 2011 – New York, New York – James W. Giddens, the Trustee for the liquidation of MF Global Inc., stated that his primary goal and aspiration is to pay commodities claimants and securities customers 100% of the amounts in their accounts as promptly as permitted by the governing regulations of the Commodities Exchange Act and the Securities Investor Protection Act and authorization by the US Bankruptcy Court. Ultimate distributions are, of course, dependent upon assets available and there is no assurance of a 100% return.
The plan for resolution of commodities claims is to make permissible distributions through “bulk transfers” to Future Commission Merchants (FCMs) willing to accept such transfers. The first transfer was aimed at avoiding forced liquidations of future positions held by claimants and severe market disruption. There were more than 3 million positions with a notional value of $100 billion. Upon approval by Judge Martin Glenn, the positions of approximately 14,500 customers were transferred successfully to other FCMs and 60% of the collateral at the CME and other DCOs supporting such positions were transferred to the FCMs. Customers, upon notifications, had immediate access to their accounts.
The second bulk transfer to approximately 23,000 claimants holding cash only in their accounts as of the filing date of the bankruptcy, October 31st, was authorized by the Bankruptcy Court on November 17th. The process is underway and its success requires finding FCMs to process the transfers. It is expected that funds will be accessible within a week or so.
The third phase of distributions is a proposed additional bulk transfer for all claimants to “true-up” the value of their distributions to 60% of the “net equity” in their accounts, including some estimated few hundred not included in the first two bulk transfers. The complex accounting data to reflect the first bulk transfer has only recently been compiled. The feasibility of any bulk transfer is dependent upon finding FCMs to receive such assets.
Distributions may be made by bulk transfer if feasible and through an individual claim process. Procedures for this claims process are before the Bankruptcy Court for consideration.
At present, the assets the Trustee has control of in commodities segregation are substantially less than the estimated allowed commodities claims. Efforts are on-going to analyze the cause of the “short-fall” and to seek to remedy it in coordination with multiple regulators and law enforcement officials.
The information in this statement does not apply to any other MF Global entity, including separate insolvency proceedings involving the parent company, MF Global Holdings Ltd.
Media Contact for the MF Global Inc. Trustee:
Kent Jarrell: 202-230-1833