Joint special administrators of MF Global UK Limited launch innovative CVA proposal
MFGUK launch innovative CVA proposal
Unique CVA brings total return to creditors to 99.75p in the pound
The joint special administrators of MF Global UK Limited, Mike Pink, Ed Boyle and Richard Heis from KPMG, are pleased to confirm that the remaining ordinary creditors of the company have voted in favour of a Company Voluntary Arrangement (CVA) which will allow them to take almost 100% of their outstanding debt in cash.
The sophisticated exchange offer for creditors, which was devised by the special administrators in conjunction with their legal advisors at Weil, gives creditors the option to exit the administration early in exchange for a cash payment that brings their total return to 99.75p in the pound.
Creditors can also choose to remain in the estate in the medium term, or participate in the funding of the exit payments and remain in the estate long-term, in exchange for a beneficial interest in the upside on the claims of the exiting creditors and medium-term creditors.
This is the first time that a CVA has been used in such a way, and will help facilitate a more streamlined winding-up of the MF Global UK estate, saving significant costs.
Mike Pink, associate partner at KPMG and joint special administrator, commented: “We believe this is an innovative mechanism which will pave the way in future for insolvency practitioners to meet the needs of different types of creditors who may prefer cash upfront or alternatively have the appetite for a longer term investment.
“As with many large international insolvency cases, it will take many years to bring the MF Global UK estate to a final conclusion. Many creditors do not wish to be long-term investors in a complex insolvency and would far rather receive their cash return as soon as possible and then be able to close their books.
“Additionally, the cost to the special administration of maintaining and updating databases of thousands of creditors who change addresses, change bank account details, marry, die and otherwise change their circumstances is expensive. This CVA mechanism will allow very substantial costs to be saved in future for the benefit of all creditors.”
About the Company Voluntary Arrangement
Following the special administration of MF Global UK in October 2011 – one of the largest collapses of a financial institution since Lehman Brothers - the joint special administrators have made a number of material settlements and realisations, which have simplified the estate considerably and permitted distributions to ordinary unsecured creditors of 90p in the pound to date.
However, due to certain complex issues relating to certain key remaining assets and liabilities, the administrators do not expect to be able to make any further material distributions for at least another two years. Further, they expect it may take a further eight or nine years to finalise the winding-up of the estate and make a final distribution.
The CVA provides optionality for creditors and is anticipated to significantly reduce the number of creditors of the estate (currently around 3,500), resulting in substantial cost savings going forward, to the benefit of all creditors. The CVA also provides for a streamlined process for resolving the remaining assets and liabilities of MFGUK and making further distributions to the remaining creditors in the medium and the long term.
The creditors meeting was held on 12 December 2017. In order to pass the resolution, over 75% by value of those voting needed to vote in favour of the proposals. The vote saw 96% by value voting in favour of the CVA.
For further press information please contact:
Katy Broomhead, Senior PR Manager, KPMG Corporate Communications
T : 0161 246 4623
M : 07824 537963
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.