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MF Global to start $6.7 billion customer payout

Former customers of MF Global Holdings' bankrupt brokerage will recoup all $6.7 billion they are owed following the completion of a payout that will begin on Friday, its trustee said.

Nearly 26,500 former commodities and securities customers of the MF Global brokerage will share in the payout, which will be made over the next several weeks, the trustee, James Giddens, said on Thursday.

MF Global sign is seen in the office building where MF Global Holdings Ltd have offices in Manhattan on November 1, 2011 in New York.
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MF Global sign is seen in the office building where MF Global Holdings Ltd have offices in Manhattan on November 1, 2011 in New York.

The payout comes nearly two-and-a-half years after the parent company once run by Jon Corzine, who had previously been a co-chairman of Goldman Sachs and governor of New Jersey, filed for Chapter 11 protection.

It often takes customers and creditors of bankrupt companies years to recoup all or some of their money.

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Lehman Brothers Holdings, the Wall Street bank that filed for bankruptcy on Sept. 15, 2008, on Thursday is returning $17.9 billion to creditors, boosting its payout so far to $80.4 billion in five distributions.

In November, U.S. Bankruptcy Judge Martin Glenn in Manhattan approved a plan to fully repay MF Global customers, including with money once earmarked for unsecured creditors who were not customers.

"Checks are going in the mail that will make all public customers of MF Global 100 percent whole," said Giddens, a Hughes, Hubbard & Reed partner who leads that firm's corporate reorganization and bankruptcy group, in a statement.

Some of the money going to former customers has come from settlements with onetime MF Global counterparties JPMorgan Chase and CME Group. Additional funds may be received from a British unit, MF Global UK, Giddens said.

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Giddens added that 24,020 former U.S. commodities futures and options customers would recover $5.4 billion.

He said another $880 million would go to 2,047 former foreign commodities futures and options customers, and $376 million would be returned to 428 former securities customers.

MF Global collapsed amid worries about a $6.3 billion bet by Corzine on European sovereign debt and that money from customer accounts had been used to cover liquidity shortfalls.

Corzine and other former MF Global officials remain subject to other lawsuits by investors, customers and regulators.

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