MF Global Holdings plan effective; settlement hearing set for July 3

By Caroline Salls

Pittsburgh, June 4 - MF Global Holdings Ltd.'s plan of liquidation took effect on Tuesday, according to a news release.

As a result, court-appointed Chapter 11 trustee Louis J. Freeh will immediately conclude his duties as trustee and transfer his responsibilities to the newly appointed board of directors, comprised of Nader Tavakoli, Richard Katz and Daniel Ehrmann.

"The joint liquidation plan is in the best interests of the creditors of MF Global Holdings Ltd. and its debtor affiliates, with the successful implementation of a distribution framework within a reasonable time frame," Freeh said in the release.

"With the plan approved and a new board in place, I am confident the liquidation process can be effectively administered to the satisfaction of the creditors."

The company said Freeh facilitated the eventual return of more than $1 billion to the creditors of MF Global Holdings and its debtor affiliates during his tenure.

Plan terms

As previously reported, the liquidation plan was approved by the U.S. Bankruptcy Court for the Southern District of New York on April 5.

Treatment of creditors under the plan will include

• Administrative claims, priority non-tax claims, liquidity facility secured claims and priority tax claims will be paid in full in cash;

• Holders of secured claims will either be paid in cash, receive the collateral securing the claims or receive the proceeds from the sale of that collateral;

• Holders of liquidity facility unsecured claims, general unsecured claims and subordinated claims will receive a share of available cash;

• Holders of convenience claims against the holding company will recover 45% in cash, and holders of convenience claims against the MF Global Finance USA and MF Global Holdings USA debtors will recover 37.5% in cash.

Holders of convenience claims against these debtors may elect to have their claims treated as general unsecured claims instead;

• Holders of general unsecured claims of more than $500,000 can elect to reduce their claims to $500,000 to be treated as convenience claims;

• All preferred interests and common interests in the holding company will be canceled, and plan trust stock will be issued to a plan trust on the plan effective date.

Each holder of a preferred interest and common interest in the holding company will not receive any distribution on account of those interests. However, if all other claims are paid in full, they may receive a share of any remaining available cash; and

• Holders of common interests in debtors other than the holding company will receive no distribution unless all other claims are paid in full, in which case they will receive a share of any remaining available cash.

Settlement condition

The court will be presented with a motion for approval of a settlement between SIPA trustee James Giddens and JPMorgan Chase Bank NA on July 3.

If approved, that agreement will satisfy the remaining condition of the global settlement among Freeh, Giddens and the special administrators of the MF Global debtors' U.K. affiliates.

Freeh hopes the global settlement will serve as a conduit to the full distribution on the claims of the customers of MF Global Inc., MF Global Holdings' broker-dealer affiliate, which is in a separate liquidation proceeding, the release said.

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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