Supreme Court Lehman Judgment: MF Global UK Implications
Commenting on the Supreme Court judgment on the Lehman case and its implications on the MF Global UK segregated client pool, Richard Heis, joint special administrator and restructuring partner at KPMG, said: “We welcome that we now have additional clarity from the Supreme Court albeit that there are further uncertainties around who is entitled to participate in the client money pool (CMP), some of which may need to be decided in court.
“Today’s judgment is likely to result in a substantially reduced percentage payout from the CMP as the money will be shared out amongst a much larger number of claimants. We have recovered approximately $1bn of client money which has been actually segregated by the banks (a further $0.1bn being held with affiliates) and recognise $1.1bn of client claims relating to those funds.
“The $1bn of money recovered will now be divided amongst a larger group, including clients who were entitled to have client money segregated for them as at the date of MF Global UK’s administration, irrespective of whether MF Global UK had in fact segregated client money for them prior to its administration. Any such claims will need to be assessed on their facts and in the light of the judgment.
“While this is good news for some claimants, who are more likely to receive better returns because of an entitlement to share in the client money pool, we expect to receive a very negative response from clients with written confirmation of segregated status.
“In developing our interim distribution model, we accounted for all the eventualities in the Lehman judgment, so our distribution can withstand this outcome and nothing will need to be recouped as a result of this.
“We will spend the next few days analysing the full implications of the judgment on returning MF Global UK client money and will communicate with clients as soon as we are able to.”