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February 6, 2013

Court Approves Cross-Border Settlement of MF Global Intercompany Claims

By Anne Sherry, J.D.

The Bankruptcy Court for the Southern District of New York approved a settlement of claims between the estate of MF Global Inc. (MFGI) and that of MF Global UK Limited (MFGUK). The companies, both subsidiaries of MF Global Holdings Ltd., are the subject of liquidation under the Securities Investor Protection Act in the United States and insolvency proceedings in the United Kingdom, respectively. The settlement between MFGI and its liquidation trustee, on the one hand, and MFGUK and its joint special administrators, on the other, "brings to an end an expensive dispute between the insolvency administrators that has held up making substantial distributions to U.S. commodities customers of MFGI" (In re MF Global Inc., January 31, 2013, Glenn, M.).

The court found that the settlement would avoid the significant continuing expense of litigation between the estates arising out of dealings between MFGI and MFGUK. In particular, the settlement resolves uncertainties around the priority scheme under English law for distributing assets that MFGI's trustee sought to recover from MFGUK's estate. The settlement would return over $500 million in customer property to the MFGI estate and includes a general release of claims between the parties.

The case is No. 11-2790 (MG) SIPA.

Attorneys: Kenneth S Ziman (Skadden, Arps, Slate, Meagher & Flom, LLP) for MF Global, Inc. Anson B. Frelinghuysen, Christopher K. Kiplok, Jeffrey S. Margolin and Sarah K. Loomis Cave (Hughes Hubbard & Reed, LLP) and Trevor R. Hoffmann (Haynes and Boone, LLP) for James W. Giddens. Irena M. Goldstein and Martin J. Bienenstock (Proskauer Rose, LLP) for Statutory Creditors' Committee of MF Global Holdings, Ltd.

Companies: MF Global, Inc.

LitigationEnforcement: BrokerDealers CommodityFutures NewYorkNews

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