MF Global Holdings wins approval of final wind-down plan

MF Global Holdings Ltd. won final approval of its plan to repay creditors, paving the way for the eighth-largest bankruptcy in U.S. history to wind down under court protection.

U.S. Bankruptcy Judge Martin Glenn in Manhattan today overruled remaining objections to the plan. An outline of its terms was filed in January, and most major objections, including one from JPMorgan Chase & Co., were resolved before today’s hearing.

“The court concludes that requirements for confirmation have been satisfied,” Glenn said, noting that creditors had voted “overwhelmingly” in its favor. His ruling comes a day after the holding company’s trustee, Louis J. Freeh, published a report that said former Chief Executive Jon Corzine and others mismanaged the company and failed to fix risk controls, leading to its demise.

“I do firmly believe that the customers in the case will be made whole, as a result of a lot of good work,” Freeh said in a statement after Glenn’s ruling.

The parent company of brokerage MF Global Inc. filed for bankruptcy on Oct. 31, 2011, after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations. The company, once run by former New Jersey Governor and Goldman Sachs Group Inc. Co-Chairman Corzine, listed assets of $41 billion and debts of $39.7 billion.

Major Hurdle

A major hurdle to the plan was overcome in March when a JPMorgan unit resolved a dispute over the plan’s treatment of an intercompany settlement, which it said hadn’t been negotiated at arm’s length.

JPMorgan also reached a $100 million settlement over the New York-based bank’s conduct in the days before and after the brokerage’s collapse. That agreement followed a year of talks and resolved claims against JPMorgan, one of the brokerage’s primary banks and a repository for customer property.

Remaining objections were resolved or overruled at the hearing. Sapere Wealth Management LLC, a former customer of the MF Global brokerage, had argued that customer claims should come ahead of other creditor claims. Glenn overruled the argument, saying it was resolved by an agreement between the holding company trustee and the trustee overseeing the brokerage’s wind- down.

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