A group of MF Global Holdings Ltd. creditors proposed a liquidation plan that would pay as much as 41.5 cents on the dollar for unsecured claims after the company reached key settlements last month with affiliates.
Citigroup Global Markets Inc., Blue Mountain Timberline Ltd., Cyrus Capital Partners LP, Deutsche Bank Securities Inc., Silver Point Capital LP and Waterstone Capital Management LP are among the plan’s backers, according to a filing yesterday in U.S. Bankruptcy Court in Manhattan. The creditors said they hold about 65% of certain MF Global loans and bonds.
“The plan proponents have proposed the plan to facilitate the prompt and efficient conclusion of the Chapter 11 cases,” they said in the accompanying disclosure statement.
MF Global filed the eighth-largest U.S. bankruptcy on Oct. 31, 2011, after getting margin calls and bank demands for money following its investment in the debt of troubled European economies. The company, which was headed by former New Jersey Governor Jon Corzine, listed assets of $41 billion and debt of $39.7 billion in its Chapter 11 filing.
The creditors, an unofficial group, estimated that the parent’s payout to unsecured claim holders would be 11.5 cents to 41.5 cents on the dollar under their plan, from assets of $276 million to $994 million. The calculation was conservative as it didn’t include some money that might come in and the creditors lacked access to all necessary information, they said.
Kevin Starke, an analyst at CRT Capital Group LLC, said he was puzzled by the group’s proposal. Instead of filing a plan, the hedge funds could have sold their bonds at current prices of 60 cents to 65 cents on the dollar, far exceeding the high end of their estimated recovery, he said in an e-mail.
“Perhaps this is an expression of impatience with the lack of disclosure and progress in the Chapter 11 case,” Starke wrote in a note to clients of CRT, which trades distressed debt. “Unless the plan proponent group’s estimates are perceived to be sandbagged, they are likely to disappoint the rest of the market.”
The creditors supporting the plan hold about $788 million of the $1.2 billion of MF Global’s loans outstanding, and $647 million of its $1 billion in notes, according to the disclosure statement.