The MF Global trustee has received court approval to advance more than $600 million of general estate assets to customers to allow 100% distributions to all customers. As a result, introducing brokers with general unsecured claims may sooner receive partial interim distributions. It is unclear whether the advance will result in introducing brokers ultimately receiving lower recoveries.
While a portion of the advanced assets represents relatively certain future recoveries of customer assets, a portion also does not. Nonetheless, all future recoveries of future customer assets, including those from pending class action litigation, will be allocated to the general estate and may or may not completely satisfy the full amount of the advanced funds. Therefore, it is unclear whether the advance will ultimately deplete the size of the general estate and thus the amount available to introducing brokers and other general creditors.
In the trustee's motion requesting the largest portion of the advance, the trustee indicated that the advance advances the Trustee's ability to make interim general estate distributions. This likely means that the trustee foresees the immediate full resolution of customer claims reducing sufficient uncertainty to allow sooner partial distributions to be made to general unsecured creditors such as introducing brokers.
By, Neal R. Stevens, Of Counsel
