In early December after MF Global Inc. bankruptcy Judge Martin Glenn approved the third bulk transfer of customers’ funds that would true up all customers to 72%, there was much optimism that former MF Global customers eventually would be made whole.
A progress report and customer forum with the trustee on Jan.12 pierced some of that earlier optimism. The trustee indicated to customers that there would be no further bulk transfers and any remaining true-up would occur through the claims process.
The trustee, in rejecting a claim by the MF Global Holdings Creditors Committee in December to delay the third bulk transfer, indicated that he could go after MF Global Holdings to make customers whole. In January he stepped back from that.
“What the trustee let us know is that he has no intention of pursuing funds at the Holdings level, and in order for us to go after money that was traced there we are going to have to get the judge to order him to do that,” says John Roe, co-founder of the Commodity Customer Coalition. “It was a little disappointing because the trustee is sort of giving up on getting to 100%. I don’t think you are going to get enough money — he said it himself — out of the assets in the MFGI estate that have enough money that was transferred to other affiliates and counterparties. You have to go to the Holdings Company, it is the quickest path. I don’t know why he is ignoring it; there is good law in place but we are going to have to let the judge make that decision,” Roe says.