KPMG's latest update on its role as joint special administrators to MF Global UK shows substantial increases in payments to clients and creditors of the brokerage and pensions services business, which went into administration following the collapse of its US parent company in 2011.
An updated illustrative financial outcome for creditors shows that available funds could amount to between $3.06bn (£1.99bn) and $3.18bn (£2.97bn) versus total client money and unsecured claims of between $3.10bn (£2.02) and $3.18bn (£2.97bn).
KPMG says that as the US settlement agreements are now expected to become unconditional some time next week, they will be able to declare a further distribution of 44 cents (29p) in the $1 (65p) for segregated clients (bringing the total interim distribution to 70 cents or 46p) and a first interim dividend of 43p in the £1 to unsecured creditors.
A pre-condition of the US settlement agreements is that amounts receivable from one third party financial institution are paid in full to MF Global UK, and these are estimated to be in the region of $95m (£62m).
In its latest update KPMG also reports there has been a significant reduction in the amount of disputed claims (both in relation to classification and value). During June 2013, the special administrators rejected over 1,700 client money and general creditor claims.
Following a High Court order obtained in June 2013, which allowed for the setting of a bar date for client money claims and the extension of the date for proving for general creditor claims to 19 July 2013, the special administrators are not required to reserve for such claims unless their rejection is appealed. Since those rejections, the special administrators have only received one formal appeal to a rejected claim.
Richard Heis, joint special administrator of MF Global UK and restructuring partner at KPMG, said: 'Returning funds will feel like a long journey for many claimants and it is certainly the case that the first use of the special administration regime for investment banks has had some challenges; not least contending with uncertainty regarding client money (further compounded by the Lehman Supreme Court judgment).'
'However, since our appointment we have made strong progress in recovering the majority of funds and assets of this highly complex business; progressing legal clarification in the High Court and agreeing settlement terms with the US group companies,' Heis said.
