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April 23, 2012

KPMG to take MF Global UK to court over $700m dispute

KPMG UK, special administrator to MF Group, is planning to take MF Global UK to court to settle a dispute over some $700m claimed by the US arm of the company.

KPMG said the two counterparts are at loggerheads on whether the amounts posted in the financial statement should be treated as segregated or non-segregated balances, which would determine how to treat the $700m.

Special administrator KPMG added it continues to pursue the recovery of approximately $400m of MF Global UK segregated client assets, monies, property assets held.

In its update to clients KPMG also said nearly 80% of the bankrupt financial derivatives broker-dealer clients’ statements have now been issued and there are more statements than claims.

The administrators also stressed a Supreme Court judgment on Lehman Brothers is likely to have an impact on the dividend payments to creditors of MF Group as the ruling stated the creditor pot at MF Global UK will need to be shared between the creditors that should have had their funds segregated. KPMG partners were appointed administrators of MF Group in the first use of the Special Administration Regime, at the end of 2011.  

The Special Administration Regime was set up in the wake of the Lehman Brothers collapse and is different to other corporate administrations because it requires administrators to focus on a swift return of client assets and the timely engagement with authorities. This is in addition to normal administrator functions that companies should be rescued or wound up in the best interests of the creditors.

The collapse of MF Global UK operations led to the loss of more than 700 jobs in the companies London office.





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