MF Global clients to get funds back

Liquidators to return to 4,300 customers 100% of money held by bankrupt firm

A former investor in the defunct MF Global Singapore has recovered most of the $270,000 he placed with the brokerage.

Mr Vernon Khoo, who had traded in what are called contracts for difference, feared he would never recover his cash when he found that it had been placed with MF Global Australia during the trading process. He thought his funds were kept in Singapore in segregated accounts.

MF Global had about 7,000 customers when it went under on Nov 1, 2011, in the wake of the bankruptcy of its United States-based parent MF Global Holdings.

But about 4,300 customers had open positions - trading positions that had not been closed as at Nov 1, 2011 - or cash in their accounts. These investors, who are entitled to recover the amounts held in their accounts, have been getting interim payments since 2012.

Mr Khoo told The Straits Times: "At the time, the frustration was also how to cash out from my profitable positions. But fortunately, not long after that, KPMG closed out the accounts."

The liquidators of MF Global Singapore have recovered US$467.2 million (S$631 million) of segregated funds from third-party brokers, counterparties, clearing houses and MF Global affiliates so far. They expect to complete their collection, which is estimated to total US$471 million, by the end of the month, said Mr Bob Yap, head of advisory at KPMG in Singapore.

He said the 4,300 customers include 3,200 customers in Singapore with cash-only accounts. All 4,300 will be able to recover 100 per cent of their proprietary funds held with the company before its liquidation. The biggest claim was for US$18.5 million.

Mr Yap said full recovery was made possible after the liquidators negotiated for the return of customer funds from the bankrupt parent's affiliates.

In addition, more than 250 unsecured creditors, including 80 employees in Singapore, and trade creditors, who are owed a total of US$63 million, could recover 100 per cent of their claims. Previously, they could expect to get back only 91.6 cents to the dollar at best.

"We can expect creditors to have a good chance of having their admitted debt repaid in full, and we are working towards a completion of the administration of the liquidation and payment of final dividends to unsecured creditors," Mr Yap said.

"We had to deal with complex issues surrounding the insolvency regimes in a number of foreign jurisdictions. Resolving cross-border claims in insolvency cases are never easy... primarily due to the application of various laws and court orders issued in the respective jurisdictions of the administrators or liquidators of the affiliates."

Mr Khoo, who is awaiting his final payment of $32,000, said he has learnt to control the amount he places with a brokerage house.

"If the largest brokerage in the world can close overnight, it is quite scary," he said. "Overall, my open positions closed in the money. I started getting paid in 2012, and have been getting payments over the past few years."

Customers can expect to receive the final distribution of their funds this quarter while creditors can expect a further interim dividend to be declared in the second quarter, KPMG said.

A version of this article appeared in the print edition of The Straits Times on March 08, 2016, with the headline 'MF Global clients to get funds back'. Print Edition | Subscribe