LONDON The United Kingdoms High Court of Justice has approved a procedure for distributing the $1 billion of client money held by MF Global UK (MFG UK) since going into special administration in 2011, according to New York-based global law firm Weil, Gotshal & Manges.
The application was made by KPMG, which is the administrator of MFG UK, to address the fact that there is no provision for such a procedure in either the United Kingdoms Financial Conduct Authority (FCA) client money rules or the Investment Bank Special Administration Rules (IBSAR).
The lack of such a procedure meant that KPMG had to create considerable reserves for claims it considered to be invalid, as well as for unknown claims.
Weil, working with KPMG and external counsel, created a draft for a unique client money distribution procedure, aimed at allowing the distribution of client money clearly and fairly, without the necessity of reserves for unknown claims or rejected claims that were not appealed.
The order effectively permits MFG UK and the administrators to distribute client money on the assumption that the only clients who are entitled to claim are those of whom KPMG is already aware, and that clients whose claims were rejected have no claims unless they appealed within the required time frame.
"This will facilitate the prompt distribution of client money and is an excellent outcome for clients of MFG UK," Mark Lawford, a senior associate in Weils business finance and restructuring team, said in a statement.
MF Global was a ring dealing member of the London Metal Exchange that went bankrupt in October 2011. The process of recovering client money has been in progress since then.
A version of this article was first published by AMM sister publication Metal Bulletin.