In an outcome that was considered unimaginable four years ago, a U.S. Bankruptcy court judge on Wednesday cleared the way for creditors of MF Global to receive nearly 100% of the money they’re owed.
The creditors will receive between 94% and 95% recoveries because MF Global’s parent company will acquire the brokerage’s assets, including pending litigation against former CEO John Corzine and other leaders. In doing so, the parent company will cede its right to collect its $1.16 billion unsecured claim against MF Global, freeing up the cash the brokerage needs to pay its creditors’ claims.
When MF Global collapsed in October 2011 with a $1.6 billion shortfall in customer funds, it revealed Corzine’s big bets on the debt. Corzine, a former U.S. Senator and governor, and other firm officials have denied wrongdoing for the firm’s downfall, according to the Wall Street Journal, and recently agreed to pay $64.5 million to settle claims filed by investors.
