MF Global and JPMorgan resolve plan, intercompany settlement issues

By Caroline Salls

Pittsburgh, March 13 - Liquidity facility agent JPMorgan Chase Bank, NA has agreed to vote in favor of MF Global Holdings Ltd.'s revised plan of liquidation and withdraw a motion for prosecution of claims, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Although it did not file an objection to confirmation of the proposed plan, JPMorgan did argue that the plan should not be confirmed because of an intercompany claim settlement, which it claims was not negotiated at arm's length.

JPMorgan also said some intercompany claims were subject to avoidance as fraudulent transfers, thereby altering some creditors' recoveries and that portions of specified intercompany claims should be subordinated or set off.

In addition, JPMorgan filed a motion on Feb. 13 to prosecute and, if appropriate, settle, claims against MF Global on behalf of the estate of MF Global Finance USA Inc.

MF Global said court-suggested mediation was successful, and the parties agreed to a revised intercompany claim settlement and related plan changes, which have been incorporated into the plan supplement.

As a result, JPMorgan has agreed to withdraw the prosecution motion and vote in favor of the revised plan.

Under the revised settlement, specified intercompany claims will be allowed, without further reduction, set off or counterclaim of any kind, provided, however, that the holding company's right to receive distributions on $275 million of its $1,887,003,995 intercompany claim against Finance USA will be subordinated to the rights of the holders of allowed class 5B liquidity facility unsecured claims until the liquidity facility claims are paid in full.

The plan confirmation hearing is scheduled for April 5.

MF Global Holdings, a New York-based commodity and derivatives broker, filed for bankruptcy on Oct. 31, 2011. Its Chapter 11 case number is 11-15059.

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