The U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, had said the plan shouldn’t pay attorneys’ fees for creditors who initially proposed the plan. Glenn deferred the issue of fees.
The Trustee had also objected to what it said were overly broad protections for third parties against future lawsuits. The U.S. Attorney for the Southern District of New York had joined in that objection. Both parties withdrew their objections after the wording of the plan was changed slightly to resolve their concerns.
“We believe the plan is the most efficient way to administer funds to the creditors,” said Irena Goldstein, a lawyer for creditors. The plan “increases distributions to creditors by limiting the administrative costs” of the bankruptcy and allows the largest creditors to elect directors to oversee MF Global’s liquidation, a committee of creditors said in court papers supporting the plan. They noted that “hundreds of claimants holdings billions of dollars in claims voted in favor of the plan, while only four votes representing less than $350,000 rejected the plan.”
The plan “went through several iterations” and was proposed “with honesty and good intentions,” Freeh said in court filings supporting the plan.
The plan, filed in January, would pay unsecured creditors as much as 41.5 cents on the dollar. 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 were among the plan’s backers, according to court filings.
James Giddens, overseeing a separate wind-down of the brokerage unit under the Securities Investor Protection Act, has projected that former domestic customers will recover more than 93 cents on the dollar. Remaining shortfalls may be repaid through other litigation or distributions of unallocated property, Giddens has said.
The holding company’s Chapter 11 case is In re MF Global Holdings Ltd., 11-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The liquidation of the broker is In re MF Global Inc., 11-02790, in the same court.