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
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
A version of this
article was first published by AMM sister publication Metal