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MF Global creditors to recoup more as bankruptcy nears end

NEW YORK (Reuters) – The trustee liquidating the bankrupt brokerage unit of Jon Corzine’s MF Global Holdings Ltd on Friday announced an agreement that would enable unsecured creditors to recoup nearly everything they are owed, and largely conclude the unit’s nearly four-year liquidation.

James Giddens, the trustee, said he would sell various claims held by the MF Global Inc brokerage, including claims against Corzine, who was chief executive of MF Global, and other officials, to the plan administrator overseeing the parent’s Chapter 11 case. The administrator would in exchange give up claims in the brokerage’s bankruptcy.

Giddens said the agreement would add $186 million to the brokerage’s bankruptcy estate, and let him pay unsecured creditors a total of 94 percent to 95 percent on their claims, including the nearly $1 billion they have already received.

“This agreement marks a final chapter in the liquidation,” Giddens said in a statement.

The trustee previously paid out $6.7 billion to customers and $33.2 million to other creditors, compensating them in full. He said the brokerage liquidation will end once seven remaining claims are resolved.

In a court filing, Erik Graber, chief operating officer of the administrator, said the agreement would benefit the parent’s estate by adding “significant litigation and insurance claims.”

The agreement requires court approval; a hearing has been set for Aug. 19.

MF Global filed for bankruptcy on Oct. 31, 2011, as worries mounted about Corzine’s $6.3 billion bet on sovereign debt, as well as credit rating downgrades, margin calls and news that customer funds had been used to cover liquidity shortfalls.

Corzine became chairman and chief executive of MF Global in 2010, shortly after leaving office as the governor of New Jersey. He is also a former U.S. senator and a former co-chairman of Goldman Sachs.

He and other former MF Global officials this month reached a $64.5 million settlement of litigation by shareholders and bondholders. Corzine still faces lawsuits by former commodities customers and the U.S. Commodity Futures Trading Commission.

The cases are In re: MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-02790; and In re: MF Global Holdings Ltd et al in the same court, No. 11-15059. (Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)

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