MF Global UK Special Administrators Make First Interim Distribution Payment
The joint special administrators of MF Global UK have confirmed that they started making interim distribution payments to those with agreed client money claims on Friday 10th February.
The first wave of settlements affects up to 600 clients with estimated claims of $12m, with a second wave of settlements starting from next week, affecting another 1,300 clients with estimated claims of $19m.
Richard Heis, joint special administrator of MF Global UK and restructuring partner at KPMG, said: “While we await the outcome of the Lehman case in the Supreme Court, and a number of other legal uncertainties to be resolved, the least risky approach would be to hold back the payment process until the full picture of all claims is known.
“However, we want to start returning client money as soon as possible and have therefore constructed an interim distribution model, which has allowed us to start making partial repayments to clients with agreed claims. Our interim payment plan is unchartered territory and will be updated to provide further distributions as events progress.
“Clearly in a situation where we are paying clients without having complete certainty as to the extent of claims, we must take a conservative approach to payments. Where both the client and ourselves have agreed the claim, the first tranche of payments is made to clients with cash only positions and those who traded in a single product line where close out information is available (eg spread betters). There are still many issues regarding the validity and classification of claims but this first payment marks an important milestone in returning client money.”
To receive an interim distribution payment, clients must agree the balance represents their entire claim against MF Global UK and must enter into a settlement agreement, which provides an indemnity to repay any amounts received in excess of the client’s entitlement.
The special administrators are urging clients who meet the interim distribution requirements to complete the bank confirmation form without which they are unable to transfer money. More detailed information on making claims is available at: www.kpmg.co.uk/mfglobaluk.
The special administrators will continue to make interim payments of 26c in the $1 as and when client money claims are agreed.