Galen Stops looks at the recent developments in the MF Global bankruptcy in both the US and the UK and questions what the industry has learnt from the FCMs collapse.
Just over one year after the collapse of MF Global and two
important decisions in the UK court give hope to UK creditors
while a Congressional investigation in the US has found the
On November 1 Justice Richards held that MFGUK, the UK
subsidiary of MF Global, was the "non-defaulting party" for the
purposes of the General Master Repurchase agreement (GMRA) it
entered into with MF Global Inc.
Justice Richards found that the special administration
process was not analogous to a liquidation and therefore the
appointment of KPMG as special administrators of MFGUK is not
an "Event of Default" for the purposes of the GMRA.
What this decision means is that the special administrators
are entitled to determine the date on which the parent
company’s claim against the estate should be
valued. Although close-out values need to be finalised, MF
Global Inc had valued its claim at £287m whereas the
special administrators had it at closer to £37m.
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