Hearing Date: January 31, 2013 at 3:00 pm (prevailing Eastern Time) 

Objection Deadline: January 22, 2013 at 4:00 pm (prevailing Eastern Time) 

James B. Kobak, Jr. 

Christopher K. Kiplok 

Sarah L. Cave 

HUGHES HUBBARD & REED LLP 

One Battery Park Plaza 

New York, New York 10004 

Telephone: (212) 837-6000 

Facsimile: (212) 422-4726 

Attorneys for James W. Giddens, 

Trustee for the SIPA Liquidation of MF Global Inc. 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF NEW YORK 

In re 

MF GLOBAL INC., 

Debtor. 

Case No. 11-2790 (MG) SIPA 

NOTICE OF TRUSTEE’S MOTION PURSUANT TO FED. R. BANKR. P. 9019(a) FOR 

ENTRY OF AN ORDER APPROVING SETTLEMENT AGREEMENT

PLEASE TAKE NOTICE that James W. Giddens (the “Trustee”), as Trustee for 

the SIPA liquidation of MF Global Inc. (“MFGI”), by and through his undersigned counsel, filed 

a motion (the “Motion”) for entry of an order (the “Order”), pursuant to Rule 9019(a) of the 

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), for approval of a settlement 

and compromise among the Trustee and MFGI, on the one hand, and MF Global UK Limited (in 

special administration) and the MF Global Joint Special Administrators Richard Heis, Richard 

Fleming and Michael Pink, on the other. 

PLEASE TAKE FURTHER NOTICE that a hearing on the Motion will be held 

before the Honorable Martin Glenn, United States Bankruptcy Judge, at the United States 

Bankruptcy Court, Alexander Hamilton Customs House, Courtroom 501, One Bowling Green, 
2 

New York, New York 10004 (the “Bankruptcy Court”), on January 31, 2013 at 3:00 p.m. 

(prevailing Eastern time) or as soon thereafter as counsel may be heard (the “Hearing”). 

PLEASE TAKE FURTHER NOTICE THAT responses, if any, to entry of the 

Order must (i) be in writing; (ii) state the name and address of the objecting party and nature of 

the claim or interest of such party; (iii) state with particularity the legal and factual bases of such 

objection; (iv) conform to the Bankruptcy Rules and Local Bankruptcy Rules; (v) be filed with 

the Bankruptcy Court, together with proof of service, electronically, in accordance with General 

Order M-399 (available at the Court’s website, www.nysb.uscourts.gov) by registered users of 

the Court’s Electronic Case Files system, and by all other parties in interest, on a 3.5 inch disk or 

CD-ROM, preferably in Portable Document Format (PDF), WordPerfect or any other Windowsbased word proceeding format no later than January 22, 2013 at 4:00 p.m. (the “Objection 

Deadline”); and (vi) served on (a) Hughes Hubbard & Reed LLP, One Battery Park Plaza, New 

York, New York, 10004, Attn: Christopher K. Kiplok, Esq. and Jeffrey S. Margolin, Esq.; (b) 

Securities Investor Protection Corporation, 805 Fifteenth Street, N.W., Suite 800, Washington, 

DC 20005, Attn: Josephine Wang, Esq. and Christopher H. LaRosa, Esq.; (c) the Commodity 

Futures Trading Commission, Three Lafayette Centre, 1155 21st Street N.W., Washington, D.C., 

20581, Attn: Martin B. White, Esq.; and (d) Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 

New York, New York, 10153, Attn: Marcia L. Goldstein, Esq. and Debra A. Dandeneau, Esq., 

with a courtesy copy to the chambers of the Honorable Martin Glenn, Alexander Hamilton 

Customs House, Courtroom 501, One Bowling Green, New York, New York 10004. 
3 

PLEASE TAKE FURTHER NOTICE that objecting parties are required to attend 

the Hearing, and failure to appear may result in relief being granted or denied upon default. 

Dated: New York, New York 

December 21, 2012 

HUGHES HUBBARD & REED LLP 

By: /s/ James B. Kobak, Jr. 

 James B. Kobak, Jr. 

 Christopher K. Kiplok 

 Sarah L. Cave 

 One Battery Park Plaza 

 New York, New York 10004 

 Telephone: (212) 837-6000 

 Facsimile: (212) 422-4726 

 Email: kobak@hugheshubbard.com

Attorneys for James W. Giddens, Trustee for 

the SIPA Liquidation of MF Global Inc. 
 Hearing Date: January 31, 2013 at 3:00 p.m. (prevailing Eastern Time) 

 Response Deadline: January 22, 2013 at 4:00 p.m. (prevailing Eastern Time) 

62166395_1 

James B. Kobak, Jr.

Christopher K. Kiplok 

Sarah L. Cave 

HUGHES HUBBARD & REED LLP 

One Battery Park Plaza 

New York, New York 10004 

Telephone: (212) 837-6000 

Facsimile: (212) 422-4726 

Attorneys for James W. Giddens, 

Trustee for the SIPA Liquidation of MF Global Inc. 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF NEW YORK 

In re 

 MF GLOBAL INC.,

 Debtor. 

Case No. 11-2790 (MG) SIPA 

MOTION PURSUANT TO FEDERAL RULE OF BANKRUPTCY 

PROCEDURE 9019 FOR ENTRY OF ORDER APPROVING SETTLEMENT 

AGREEMENT BETWEEN THE DEBTOR, THE TRUSTEE, 

MF GLOBAL UK LIMITED (IN SPECIAL ADMINISTRATION) AND 

MFGUK JOINT SPECIAL ADMINISTRATORS

James W. Giddens (the “Trustee”), as Trustee for the liquidation of MF Global 

Inc. (“MFGI” or the “Debtor”) under the Securities Investor Protection Act, 15 U.S.C. § 78aaa, 

et seq. (“SIPA”),1

 by and through his undersigned counsel, hereby files this motion (the 

“Motion”) pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the 

“Bankruptcy Rules”), for approval of a settlement and compromise (the “Settlement 

Agreement,” attached hereto as Exhibit 1) between MFGI and the Trustee, on the one hand, and 

MF Global UK Limited (in special administration) (“MFGUK”) and the MFGUK Joint Special 

 

1. SIPA appears at 15 U.S.C. § 78aaa. For convenience, subsequent references to SIPA will omit “15 U.S.C.” 
2 

62166395_1 

Administrators Richard Heis, Richard Fleming and Michael Pink (the “JSAs”), on the other 

(collectively with MFGI, the Trustee and MFGUK, the “Parties”).2

I. PRELIMINARY STATEMENT 

1. The Trustee seeks the Court’s approval to enter into a Settlement 

Agreement with the JSAs to resolve―on a global basis―the issues and disputes between the 

Parties and, following the Effective Date, allow for a prompt influx of several hundred million 

dollars to the MFGI estate primarily for the benefit of MFGI’s former commodities customers 

who traded on foreign exchanges. Once effective, the Settlement Agreement would also 

guarantee a mutual certainty to the resolution of the disputes between the two estates, the value 

of which exceeds one billion dollars, and which are currently the subject of costly and timeconsuming litigation or would require additional costly and time-consuming litigation with 

uncertain outcome. 

2. Coupled with the agreement that the Trustee has entered into with Louis J. 

Freeh (the “Chapter 11 Trustee”), Trustee for MF Global Holdings Ltd. (“MFG Holdings”), the 

former parent company of MFGUK and MFGI, and affiliates, globally resolving the mutual 

claims between the MFGI and MFG Holdings estates (the “MFG Holdings Agreement”), the 

Trustee will also be in a position to release considerable reserved amounts that were being 

maintained for the disputed claims of these former affiliates of MFGI.3

 If the conditions 

(discussed further below) are satisfied, the Settlement Agreement will allow, with the Court’s 

 

2. Capitalized terms not otherwise defined in this Motion shall have the same meaning as the definitions in the 

Settlement Agreement. 

3. The MFG Holdings Agreement, while not the subject of this Motion, is attached hereto as Exhibit 2 for the 

Court’s reference. 
3 

62166395_1 

authority, the Trustee to make significant additional distributions to MFGI’s former commodities 

and securities customers. 

3. As described in this Motion, the extensive and detailed discussions and 

negotiations between the Trustee and the JSAs and their professionals have allowed the Parties to 

arrive at this mutually beneficial agreement. If the Conditions of the Settlement Agreement are 

satisfied, the result will be the influx of approximately $230 million to the MFGI estate from 

MFGUK, plus a further $60 million to follow shortly thereafter, which will be part of an overall 

recovery to the MFGI estate from MFGUK estimated to be approximately $500 million to $600 

million (after offset). The Settlement Agreement also gives certainty to the valuations of 

MFGUK’s claims into the MFGI estate, which allows the Trustee to release millions of 

additional dollars currently being reserved for the MFGUK claims. 

II. JURISDICTION AND VENUE 

4. On October 31, 2011 (the “Filing Date”), the Hon. Paul A. Engelmayer, 

United States District Judge for the Southern District of New York, entered an Order 

Commencing Liquidation (the “MFGI Liquidation Order,” Docket No. 1) pursuant to the 

provisions of SIPA in the case captioned Securities Investor Protection Corp. v. MF Global Inc., 

Case No. 11-cv-07750 (PAE). 

5. The MFGI Liquidation Order, inter alia, (i) appointed the Trustee for the 

liquidation of the business of MFGI pursuant to SIPA § 78eee(b)(3); and (ii) removed this case 

to this Court pursuant to SIPA § 78eee(b)(4), in the case captioned In re MF Global Inc., Case 

No. 11-2790 (MG). 

6. Following removal to this Court for all purposes as required for SIPA 

cases by § 78eee(b)(4), this Court has “all of the jurisdiction, powers, and duties conferred by 
4 

62166395_1 

[SIPA] upon the court to which application for the issuance of the protective decree was made.” 

SIPA § 78eee(b)(4). 

7. Venue is proper in this Court pursuant to SIPA § 78eee(a)(3) and 15 

U.S.C. § 78aa. 

III. BACKGROUND 

8. MFGI and MFGUK were subsidiaries of MFG Holdings, a Delaware 

corporation, which was the parent of nearly fifty direct or indirect subsidiaries (collectively, “MF 

Global”). MFG Holdings filed for protection under Chapter 11 of the Bankruptcy Code on the 

morning of October 31, 2011, which was followed that day by the directors of MFGUK 

petitioning the High Court of England and Wales (the “High Court”) to place MFGUK in special 

administration and the Securities Investor Protection Corporation (“SIPC”) commencing 

proceedings to liquidate MFGI under SIPA. The High Court appointed Richard Heis, Richard 

Fleming, and Michael Pink of KPMG LLP as the JSAs. The United States District Court for the 

Southern District of New York appointed the Trustee for the SIPA liquidation of MFGI. 

9. MFGI was MF Global’s principal U.S. broker-dealer and futures 

commission merchant (“FCM”). MFGI traded through more than seventy exchanges globally, 

including through affiliates in the United Kingdom, Australia, Singapore, India, Canada, Hong 

Kong and Japan, both on its own behalf and on behalf of customers. A number of affiliates of 

MFGI in turn traded through accounts with MFGI as their FCM or broker-dealer in the United 

States. 

10. MFGUK, based in London, was MF Global’s principal European brokerdealer and dealt in commodities, fixed income, equities, foreign exchange, and futures and 

options. MFGUK is authorized and regulated by the Financial Services Authority (“FSA”) in the 
5 

62166395_1 

U.K., and traded and settled securities on European and other foreign exchanges for its 

customers, affiliates (including MFGI), and itself. 

11. Prior to the Filing Date, there were extensive dealings between MFGI and 

MFGUK. The Parties have expended significant effort in investigating these dealings, as a result 

of which the Trustee and the JSAs have identified and brought claims against each other’s 

respective estates. The Trustee and the JSAs, together with their professionals, have worked 

extensively together to develop and share information about MFGI and MFGUK. The Trustee 

and the JSAs have exchanged tens of thousands of pages of documents and many gigabytes of 

information concerning their respective claims and other matters. The Trustee’s professionals 

regularly corresponded and met with the JSAs’ professionals with the aim of an efficient and 

expeditious resolution of the Parties’ claims. Despite these efforts to work cooperatively, the Parties 

identified significant disputes, some of which have led to litigation.

12. The necessary process of investigating, conducting litigation, and 

preparing for further litigation of these claims has already cost substantial sums. If the Parties 

were to continue to advance the litigation between them, significantly more expense would be 

incurred. Substantial briefing has already occurred before the High Court for issues related to 

the MFGI 30.7 Client Asset Claim and the RTM collateral, together with substantial discovery in 

relation to the MFGI 30.7 Client Asset Claim, which are discussed below. Despite the time and 

effort already expended, moving forward with litigation of the claims would require substantially 

more time and expense, as complex issues remain unresolved. 

13. One of the key legal issues originally underlying the Trustee’s claim into 

the MFGUK special administration was the determination of the priority at which the funds and 

assets that the Trustee sought to reclaim on behalf of MFGI’s former customers could be 

recovered under English law. Given the potentially significant differences in the estimated 
6 

62166395_1 

recovery rates for the categories of property, this determination would have a significant impact 

on the amount the Trustee could expect to recover from the MFGUK special administration. 

14. As recoveries were obtained in the special administration and after 

extensive discussion and diligence between the Parties, including a review of projected 

recoveries for the MFGUK estate prepared by the JSAs, the Parties came to realize that very 

significant and similar percentage distributions would likely be made to the Trustee no matter 

how the claims were categorized. Thus, the legal characterization of the 30.7 Funds, a question 

that would be costly and time-consuming to continue to litigate, would not in fact significantly 

impact the Trustee’s overall recoveries. In that connection, nothing in the Settlement Agreement 

or in this Motion reflects any admission of liability by any Party in relation to the 

30.7 Application, nor any comment on the merits of the 30.7 Application or the legal issues that 

arise in relation to it (including in relation to the effect of CFTC Rule 30.7). 

15. As a result, the Trustee believes that the Settlement Agreement reaches a 

practical and economically sound resolution to an undoubtedly costly and protracted legal battle, 

the outcome of which is uncertain, and the Trustee respectfully submits that the Settlement 

Agreement is therefore beneficial to the MFGI estate, its customers, and other creditors. 

IV. THE PARTIES’ CLAIMS 

A. MFGI’s Claims 

16. On March 30, 2012, the Trustee submitted the MFGI Client Money and 

MFGI Client Asset Claim forms to the JSAs. On May 25, 2012, the Trustee submitted MFGI’s 

creditor claim form to the JSAs. The MFGI Claims against MFGUK amount to a total of 

approximately $910 million of Client Money and Client Assets and nearly $500 million of 

unsecured creditor claims, as follows. 
7 

62166395_1 

i. The MFGI 30.7 Client Asset Claim of approximately $640 million in 

property that the Trustee believed was or should have been secured for 

former MFGI 30.7 Customers. 

ii. The MFGI Client Money Claim of approximately $270 million, which 

was comprised of approximately $95 million in respect of MFGI’s open 

positions held with MFGUK as of October 31, 2011. The MFGI Client 

Money Claim also includes the $175 million wire transfer from MFGI to 

MFGUK on October 28, 2011. 

iii. Unsecured creditor claims of approximately $465 million relating to 

collateral posted with respect to RTM transactions, intercompany 

repurchase transactions, and other miscellaneous items. 

1. 30.7 Funds 

17. MFGI’s U.S. futures and options customers who wished to trade on nonU.S. exchanges (“30.7 Customers”) deposited cash for margin requirements for these trades into 

MFGI’s segregated 30.7 accounts held with Harris Bank.4

 MFGI, which was not authorized to 

trade on non-U.S. exchanges, conducted its trading on foreign exchanges (with the exception of 

Canadian exchanges), through MFGUK. Where MFGUK was to act as carrying broker for such 

trades, MFGI transferred the margin to MFGUK (the “30.7 Funds”). Although MFGUK was 

aware that MFGI was acting on behalf of its underlying 30.7 Customers, the JSAs’ position is 

that MFGUK did not consistently hold the 30.7 Funds―transferred primarily in the form of U.S. 

Treasury Bills (“T-Bills”)―on a secured basis. 

 

4. The Commodities Futures Trading Commission’s (“CFTC”) Regulation 30.7 provides that an FCM “must 

maintain in a separate account or accounts money, securities and property in an amount at least sufficient to 

cover or satisfy all of its current obligations to foreign futures or foreign options customers denominated as the 

foreign futures or foreign options secured amount. Such money, securities and property may not be 

commingled with the money, securities or property of such futures commission merchant, with any proprietary 

account of such futures commission merchant, or used to secure or guarantee the obligations of, or extend credit 

to, such futures commission merchant or any proprietary accounts of such futures commission merchant.” 17 

C.F.R. § 30.7(a) (2012). 
8 

62166395_1 

18. As of October 31, 2011, MFGI’s records show that the value of the margin 

posted to the relevant secured 30.7 account was $639,918,174. The amount of 30.7 Funds 

represents a sizeable portion of the total shortfall in the 30.7 estate property available for 

distribution to 30.7 Customers. 

19. On May 3, 2012, the JSAs made an application to the High Court seeking 

directions concerning whether MFGI has a client asset, client money, or other proprietary claim 

over the customer property that is the subject of the MFGI 30.7 Client Asset Claim (the “30.7 

Application”). The 30.7 Application concerned the 30.7 Funds that had been transferred from 

MFGI to MFGUK. The Trustee’s position is that MFGI has an exclusive and priority claim over 

all 30.7 Funds, whether on the grounds that the 30.7 Funds were client money or client assets, or 

on some other proprietary basis. The JSAs’ position is that absolute title was transferred to 

MFGUK, which became the legal and beneficial owner of the 30.7 Funds, and that accordingly 

MFGI only has an unsecured creditor claim in relation to the 30.7 Funds. At a directions hearing 

on June 1, 2012, the High Court, at the Trustee’s urging for an early date, set the trial to begin on 

April 9, 2013.

20. The Parties engaged in extensive pleading of the details of their position 

over a period of months. The proceedings then moved to a discovery phase, which involved 

gathering, searching, and reviewing hundreds of thousands of documents to cull the population 

of relevant documents for actual production. The Parties have now exchanged disclosure of tens 

of thousands of documents and significant volumes of financial data from MFGI’s and 

MFGUK’s former operating systems. The Parties had only just begun to review each other’s 

document productions, a process that would have to be quickly completed in early 2013 if the 

case proceeded to witness statements, expert reports and an April trial date. Substantial and 
9 

62166395_1 

intensive work would be required by both Parties between now and April in order to prepare for 

what is expected to be a multi-week trial, the outcome of which is uncertain. The outcome of the 

trial will not necessarily bring certainty either, as appeals may follow thereafter. Accordingly, 

were the 30.7 Application to continue, any final decision on the appropriate treatment of the 30.7 

Funds could be years away for what now appears to be, as noted above, a non-material difference 

in rate of recovery on MFGI’s Claims. As part of the Settlement Agreement, the Parties have 

agreed to seek a stay of the litigation in the 30.7 Application.

21. For the purposes of the Settlement Agreement, the JSAs have agreed to 

accept the full value of all claims in respect of the 30.7 Funds, $639,918,174, with a portion 

(approximately $196 million) being returned as a client asset, and the balance being returned as 

an unsecured creditor claim.

2. $175 Million Transfer 

22. On October 28, 2011, MFGI transferred $175 million from an MFGI 

Treasury house account to an MFGUK account in satisfaction of an MFGUK overdraft balance 

in that account at JPMorgan Chase in London. These funds ultimately appear to have come from 

an MFGI segregated customer account and the transfer appears to have been made at the 

direction of MFG Holdings’ senior management (the “Wire Transfer”). 

23. The Trustee is seeking the return of these funds as part of the MFGI Client 

Money Claim against MFGUK. However, the Trustee and the JSAs have agreed for the 

purposes of the Settlement Agreement that the claim will be accepted in full by MFGUK as a 

general unsecured creditor claim. 

3. RTM 

24. Starting in about 2010, MF Global began a policy of accumulating a 

portfolio of European sovereign debt securities. These were primarily bonds issued by European 
10 

62166395_1 

states experiencing severe financial pressures. Investment in these securities peaked at nearly 

$7 billion in October 2011. MFGUK was the MF Global entity with the authority to trade on the 

relevant European exchanges, so all such trades necessarily went through MFGUK. 

25. Generally, MFGUK purchased the securities on the market and then 

MFGI and MFGUK entered into repurchase transactions (“repos”) with each other, whereby the 

securities were sold at fixed prices on the terms that equivalent securities would be repurchased 

at a later date.5 These transactions were known as repos to maturity (“RTM”), since the 

repurchase date under the repos would match the maturity date of the securities, which was 

generally 12 to 18 months from the beginning of the transaction. 

26. These repos were governed by a standard Global Master Repurchase 

Agreement (“GMRA”), which provided that upon termination of the GMRA by default of one of 

the parties, it is the “non-Defaulting Party” who values, pursuant to the terms of the GMRA, the 

net close-out amount payable, a right with potentially significant financial effect. Each of MFGI 

and MFGUK viewed itself as the non-Defaulting Party. 

27. On July 4, 2012, the JSAs sought directions from the High Court to 

resolve the dispute over which entity, MFGI or MFGUK, was the “non-Defaulting Party” under 

the GMRA. A hearing on the dispute was held on October 23, 2012, and on November 1, 2012, 

the High Court issued a judgment in favor of the JSAs, finding that MFGUK was the nonDefaulting Party and ordered that the Trustee pay the JSAs’ costs of the litigation of the 

application, a standard order in English litigation. The Trustee considered the judgment and 

 

5. The transactions were generally structured as follows: (1) MFGUK purchased the securities for cash from the 

market; (2) MFGUK sold the securities to MFGI for cash; (3) MFGI repo’d the securities to MFGUK in 

exchange for cash; and (4) MFGUK repo’d the securities to a Clearing House for cash. 
11 

62166395_1 

potential grounds for appeal, and determined that further litigation of this issue would not be in 

the best interests of MFGI’s customers and creditors. As a result, the Trustee did not apply for 

permission to appeal the November 1, 2012, judgment, and has paid, to the satisfaction of the 

JSAs, the order of costs. Although the issue of the non-defaulting party has been determined, 

there are potentially a number of other grounds for dispute in relation to the valuation of the 

RTM claim, which could potentially involve litigation both in England and in the United States. 

For the purposes of entering the Settlement Agreement, the JSAs and the Trustee agreed on a 

closeout valuation for the RTM claim. 

4. Hindsight Proceeding 

28. On May 3, 2012, the JSAs filed an application with the High Court 

seeking directions on the appropriate valuation methodology for client money claims in which 

the clients held open positions as of the date MFGUK entered special administration (the 

“Hindsight Proceeding”).6

 The High Court appointed two representative clients of MFGUK to 

argue the two sides of the case. The Trustee was not a party to the Hindsight Proceeding but, 

because the relevant part of the MFGI Client Money Claim was prepared on the basis of values 

as at October 31, 2011, the outcome could impact the MFGI Client Money Claim. Accordingly, 

the Trustee’s counsel monitored the submissions of evidence, expert testimony, and argument. A 

hearing on the application was held on October 30–31, 2012, and a decision by the High Court 

remains pending. 

 

6. The basic issue is whether the valuation should be based on market value or mark-to-market value as of the time 

of the “primary pooling event” (being October 31, 2011, the date on which MFGUK entered into special 

administration) or on the actual value at which the position was subsequently closed out. These two values can, 

and do, vary significantly. 
12 

62166395_1 

B. MFGUK’s Claims 

29. The JSAs have also filed claims against MFGI, which, net of duplicate 

claims, asserts approximately $410 million in claims: $258 million in commodities claims (the 

MFGUK 4(d) Commodities Claim and the MFGUK 30.7 Commodities Claim) and $147 million 

in securities claims (the MFGUK Securities Claim and MFGUK DTC Box 7423 Claim). The 

JSAs have also filed the MFGUK Unsecured General Creditor Claims in the amount of 

approximately $5 million. 

30. The Trustee has issued letters of determination (“LODs”) to the JSAs 

concerning the MFGUK 4(d) Commodities Claim, the MFGUK 30.7 Commodities Claim, the 

MFGUK Securities Claim and MFGUK DTC Box 7423 Claim. A summary of the claims filed 

by the JSAs follows: 

 Commodities Customer Claims 

 Amount claimed by MFGUK: $257,576,041 

 Amount reclassified by Trustee to Securities Customer Claims: 

$15,606,895 

 Amount reclassified by Trustee to General Creditor Claims: 

$2,234,846 

 Amount allowed in Trustee’s LOD: $244,131,936 (of this, $12.8 

million was allowed as a non-public customer claim) with the 

following breakdown: 

 MFGUK 4(d) Commodities Claim: $231,510,091 

 MFGUK 30.7 Commodities Claim: $11,076,285 

 Deliveries: $1,545,560 

 Securities Customer Claims 

 Amount claimed by MFGUK: $147,296,833 

 Amount reclassified by Trustee from Commodities Customer 

Claims: $15,606,895 

 Amount allowed in Trustee’s LOD: $15,796,402 

 The Trustee also made the following determinations and 

reclassifications on amounts claimed: 

 DTC Securities: $85,720,480 (both customer and MFGUK 

proprietary) – Trustee issued a deficiency letter, which has 

led to the further exchange of information and analysis 
13 

62166395_1 

 Failed Trades: $6,029,004 – reclassified to a general 

creditor claim 

 Stock Loan: $737,485 – reclassified to a general creditor 

claim 

 Foreign Exchange: $54,809,864 – reclassified to a general 

creditor claim 

 General Creditor Claims 

 Amount claimed by MFGUK: $4,609,966 intercompany nontrading activity 

 Amount reclassified by Trustee from Commodities Customer 

Claims: $2,234,846 

 Amount reclassified by Trustee from Securities Claims 

 Failed Trades: $6,029,994 

 Stock Loan: $737,485 

 Foreign Exchange: $54,809,864 

C. Duplicative Claims 

31. Certain of the 30.7 Customers of MFGI have submitted or may submit 

claims against MFGUK in respect of the MFGUK/MFGI Futures and Options Business 

(“Duplicative Claims” and “Duplicative Claimants”). Duplicative Claims compete with the 

claims submitted by the SIPA Trustee against MFGUK. At present, there are approximately 

116 known Duplicative Claims. 

32. The Duplicative Claimants appear on MFGI books and records as MFGI 

30.7 Customers. Any of the 30.7 Funds that the Duplicative Claimants are or may be seeking are 

being held at MFGUK only as a result of the contractual arrangement between MFGI and 

MFGUK pursuant to which MFGI traded on foreign exchanges by and through MFGUK for the 

account of these and other former customers. These Duplicative Claimants had no independent 

relationship with MFGUK with respect to the 30.7 Funds or related trading activity―all such 

transactions were conducted between these former customers and MFGI only, and then between 

MFGI and MFGUK for the account of these and other former customers. 
14 

62166395_1 

33. The Parties agree that the Trustee is the proper and exclusive claimant 

against MFGUK for the 30.7 Funds, and that the right to recover the 30.7 Funds rests properly 

and exclusively in the Trustee. The 30.7 Customers of MFGI therefore should not be permitted 

to attempt to commence or continue the assertion of Duplicative Claims against MFGUK, as 

these would prevent the achievement of the certainty that the Settlement Agreement now makes 

possible. 

34. The Settlement Agreement before the Court seeks to achieve certainty that 

existing Duplicative Claims (other than certain de minimis claims) will not be continued against 

MFGUK, and that further Duplicative Claims will be barred by order of this Court. This is a 

condition of the JSAs giving effect to the Settlement Agreement. Accordingly, as a condition to 

the Settlement Agreement becoming effective, the Order sought by this Motion must provide 

(among other things) that (i) the customers and creditors of MFGI are prohibited from making or 

continuing any claim directly against MFGUK that is a Duplicative Claim or any Claim that, 

when made, would be a Duplicative Claim, and (ii) future payments by the SIPA Trustee from 

the MFGI 30.7 commodities estate to any customer with an allowed claim with a value greater 

than $12,000 is conditional on an appropriate release of all Claims that are Duplicative Claims or 

that, when made, would be Duplicative Claims, being given by such customer in favor of 

MFGUK and the JSAs. 

V. THE SETTLEMENT AGREEMENT 

35. The Settlement Agreement will, on the Effective Date, bring increased 

certainty to the MFGI estate and permit the Trustee to make substantial progress toward 

completion of the SIPA liquidation proceedings of MFGI. It is in the best interests of the MFGI 

estate, its customers, and its creditors for the Trustee to complete distributions and the SIPA 

liquidation proceedings of MFGI as promptly as possible. See SIPA § 78fff(a)(1) and (a)(4). To 
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this end, it is in the best interests of the MFGI Estate, its customers, and its creditors for the 

Trustee to resolve MFGI and MFGUK’s respective claims against each other as promptly as 

practicable and in a consensual manner. 

36. The Settlement Agreement reflects an integrated, commercially reasonable 

and comprehensive settlement of MFGI’s and MFGUK’s claims against each other, and each 

component and protection contained therein and in the proposed Order, including the releases 

and injunctions, are an integral part of the Settlement Agreement. 

37. By settling MFGUK’s claims against MFGI, the Trustee will be able to 

avoid the expense, delay and uncertainty associated with continuing litigation. 

38. One of the conditions of the Settlement Agreement that will allow the 

JSAs to make the distributions that the Parties contemplate is the removal of the competing 

claims of the Duplicative Claimants and the withdrawal of certain claims of MFG Holdings and 

related Chapter 11 debtors. As part of the MFG Holdings Agreement, the Chapter 11 Trustee 

agrees, on certain conditions having been met, to withdraw the competing claims into the 

MFGUK special administration. Therefore, approval of the Settlement Agreement―together 

with the MFG Holdings Agreement and the satisfaction of all other conditions to the 

effectiveness of the Settlement Agreement―means that, subject to the satisfaction of all 

Conditions, in addition to substantial funds being reserved by the MFGI estate, substantial 

reserved funds in securities customer property and the domestic futures (“4d”) class of 

commodity customer property estates will no longer need to be reserved. Together, the two 

agreements will allow for significant distributions to MFGI’s former customers, with the 

expectation that MFGI’s former securities customer claimants can be paid in full and further 
16 

62166395_1 

significant distributions can be made to both the domestic and foreign classes of commodity 

customer claimants. 

 A. The Principal Terms Of The Settlement Agreement 

39. Because of the complex nature of the relationship between MFGUK and 

MFGI, the Settlement Agreement is comprised of a number of different agreed claim amounts, 

which include various provisions for setoffs and shortfalls. (For the specific provisions, see the 

Settlement Agreement, Ex. 1, Sections 3-5.) Although subject to subsequent adjustments in 

certain cases, the agreed amounts under the Settlement Agreement are as follows: 

 MFGI Client Asset Claim: $192 million (net of expenses); 

 MFGI Client Money Claim: $54 million (a conservative estimate pending 

resolution of Hindsight Proceeding), to be paid at an estimated initial 

dividend rate of 60 cents; 

 MFGI Unsecured Creditor Claim: approximately $323 million (subject to 

further adjustment due to a variety of factors following the Settlement 

Agreement becoming effective), to be paid at an estimated initial dividend 

rate of 20 cents; and 

 The total approximate initial distribution from MFGUK (in special 

administration) to the MFGI estate following the Effective Date: 

$291 million. 

40. Therefore, the total combined recovery will be approximately 

$500 million to $600 million, net of offsets of MFGUK’s claims into the MFGI estate. 

B. Conditions To Effectiveness Of The Settlement Agreement 

41. The result that the Settlement Agreement will achieve is conditioned upon 

a number of interrelated prerequisites, each of which is critical to the fair and equitable 

distribution to customers and creditors that the Parties desire. As described below, these 

conditions are essential parts of the resolution that the Settlement Agreement achieves. (The 

proposed Order is attached hereto as Exhibit 3.) 
17 

62166395_1 

42. The Parties have agreed that the effectiveness of the Settlement 

Agreement is conditional on, among other things, the following terms: 

 Entry by this Court, in a form and substance reasonably acceptable to the 

Parties, of an order: 

 authorizing the Trustee to implement the Settlement Agreement, 

perform fully his obligations in respect to the Settlement 

Agreement, and take all actions reasonably necessary to 

consummate the Settlement Agreement; 

 prohibiting the customers and creditors of MFGI from making or 

continuing any claim directly against MFGUK which is a 

Duplicative Claim; and 

 providing that prior to making any further distribution from the 

MFGI 30.7 commodities estate to a customer (with an allowed 

claim with a value greater than $12,000 (US)) in MFGI’s SIPA 

proceeding, the Trustee will obtain an appropriate release of all 

Duplicative Claims in favor of MFGUK and the JSAs. 

 JPMorgan Chase withdraws certain claims filed against MFGUK, signs 

appropriate release documents and returns certain account balances and 

amounts to MFGUK. 

 Claims in any proceedings by MFG Holdings and MF Global Finance 

USA Inc. (“FinCo.”) (collectively, the “Holdings/FinCo. Proceedings”) 

have been withdrawn and MFG Holdings and FinCo. have signed releases 

in favor of MFGUK, save with respect to certain agreed claims. 

VI. RELIEF REQUESTED 

43. The Trustee has determined, on the basis of the Settlement Agreement, 

that protracted litigation over the foregoing events, with its attendant costs and risks, would not 

be in the best interest of the MFGI estate. By this Motion, the Trustee requests approval of the 

Settlement Agreement pursuant to Bankruptcy Rule 9019(a). 

 A. Basis For Relief 

44. Bankruptcy Rule 9019(a) provides, in relevant part, that “[o]n motion by 

the trustee and after notice and a hearing, the court may approve a compromise or settlement.” 
18 

62166395_1 

Bankruptcy Rule 9019(a) “empowers the Bankruptcy Court to approve compromises and 

settlements if they are in the best interests of the estate.” Vaughn v. Drexel Burnham Lambert 

Grp., Inc. (In re Drexel Burnham Lambert Grp., Inc.), 134 B.R. 499, 505 (Bankr. S.D.N.Y. 

1991). Accordingly, the Court is authorized to approve the settlement, on the terms set forth in 

the Settlement Agreement. 

45. In determining whether to approve a proposed settlement pursuant to 

Bankruptcy Rule 9019(a), a court must find that the proposed settlement is fair and equitable, 

reasonable, and in the best interests of the debtor’s estate. Protective Comm. for Indep. 

Stockholders of TMT Trailer Ferry Inc. v. Anderson, 390 U.S. 414, 424 (1968); Air Line Pilots 

Ass’n v. Am. Nat’l Bank and Trust Co. of Chicago (In re Ionosphere Clubs, Inc.), 156 B.R. 414, 

426 (S.D.N.Y. 1993), aff’d, 17 F.3d 600 (2d Cir. 1994). A decision to approve a particular 

compromise or settlement is within the sound discretion of the bankruptcy court. In re Drexel 

Burnham, 134 B.R. at 505. It is appropriate for the court to consider the opinions of the trustee 

or debtor in possession that a settlement is fair and equitable. Nellis v. Shugrue, 165 B.R. 115, 

122 (S.D.N.Y. 1994). In addition, the bankruptcy court should exercise its discretion “in light of 

the general public policy favoring settlements.” In re Hibbard Brown & Co., 217 B.R. 41, 46 

(Bankr. S.D.N.Y. 1998); see also Shugrue, 165 B.R. at 123 (“[T]he general rule [is] that 

settlements are favored and, in fact, encouraged by the approval process outlined above.”). 

46. In determining whether to approve a proposed settlement, a bankruptcy 

court need not decide the numerous issues of law and fact raised by the settlement, but rather 

should “canvas the issues and see whether the settlement ‘fall[s] below the lowest point in the 

range of reasonableness.’” Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 

1983) (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972)); In re Purofied Down Prods. 
19 

62166395_1 

Corp., 150 B.R. 519, 522 (S.D.N.Y. 1993) (in making the determination of reasonableness, the 

court need not conduct a “mini-trial” on the merits). “All that [the proponent of the settlement] 

must do is establish [that] it is prudent to eliminate the risks of litigation to achieve specific 

certainty though admittedly [the settlement] might be considerably less (or more) than were the 

case fought to the bitter end.” Florida Trailer and Equip. Co. v. Deal, 284 F.2d 567, 573 (5th 

Cir. 1960) (citation omitted). 

B. The Settlement Falls Within the Range of Reasonableness 

47. In the instant case, weighing the reasonableness factors for purposes of 

Bankruptcy Rule 9019, the Trustee has concluded that the Settlement Agreement should be 

approved. 

48. First, litigation based on the Parties’ claims against one another would be 

expensive and protracted, and would divert significant resources and attention of the Trustee, his 

counsel, and his staff. Litigation ongoing in the U.K. has already illustrated the complexity of 

the disputed issues, and the time and effort that would be necessary to fully litigate them. 

Moreover, given MFGUK’s defenses with respect to the Trustee’s claims and the inherent 

uncertainties of litigation, the Trustee cannot be certain of the results of any such litigation. 

49. Second, the proposed settlement, once effective, is expected to result 

ultimately in the return of over $500 million in customer property to the MFGI estate and 

otherwise make substantial funds available for distribution to customer claimants. The 

Settlement Agreement, together with the agreement with the Chapter 11 Debtors, would 

substantially increase the fund of customer property for distribution to all classes of commodities 

and securities customers and facilitate distribution consistent with the mandate of the statute 

without the uncertainty and delay of litigating disputed claims. 
20 

62166395_1 

50. Third, the proposed settlement is the product of significant effort to 

reconcile MFGUK and MFGI’s substantial and complicated claims against one another. If 

approved, the Settlement Agreement would resolve these claims, permitting the Trustee, his 

counsel, and his staff to refocus resources and attention on other claims and claimants and to 

move toward final distributions to customers and creditors. The netting and release of claims 

will enable the Trustee to release substantial reserves that the Trustee maintains and will free up 

funds for returning to former commodity customers. 

51. Fourth, the Parties are represented by sophisticated and experienced 

professionals. The Parties are represented by highly regarded law firms and financial advisors 

with significant relevant experience in broker-dealer insolvency. The Parties’ professionals also 

fully understand the difficulties of successfully concluding a SIPA liquidation of this size and 

complexity and the potential consequences to customers and general creditors and the estate if 

this Settlement Agreement is not consummated. 

52. Fifth, the Parties grant general releases of claims against each other 

(including with respect to the Parties’ administrators, members, partners, directors, officers, 

employees, agents, advisors, or representatives). These releases are reasonable in scope and 

necessary to accomplish the certain resolution of the Parties’ claims against each other. They 

also have no impact on potential direct claims held by non-settling parties. See, e.g., In re Dewey 

& LeBoeuf LLP, 478 B.R. 627, 644 (Bankr. S.D.N.Y. 2012) (finding releases “reasonable and 

necessary to accomplish the purposes” of the settlement agreement where they did not impact 

potential direct claims by non-settling parties). 

53. Sixth, the Settlement Agreement is the product of arm’s length 

negotiations between the Trustee and the JSAs. 
21 

62166395_1 

54. In addition, enjoining the 30.7 Customers from commencing or pursuing 

Duplicative Claims against MFGUK is necessary and appropriate. The Settlement Agreement 

allows the 30.7 Customers to receive their allowed distributions from MFGI, and enjoining 

Duplicative Claims will prevent the 30.7 Customers from creating uncertainty and unnecessarily 

tying up resources by bringing or continuing claims against MFGUK and potentially obtaining 

an element of double recovery on their claims. See generally Marshall v. Picard (In re Madoff), 

848 F. Supp. 2d 469 (S.D.N.Y. 2012) (upholding the Bankruptcy Court’s ruling enjoining former 

customers of bankrupt SIPA estate from filing their own lawsuits against third parties allegedly 

involved in the firm’s Ponzi scheme, holding that the former customers’ causes of actions 

belonged to the SIPA Trustee); see also In re Finley, Kumble, Wagner, Heine, Underberg, 

Manley, Myserson & Casey, 160 B.R. 882, 894 (Bankr. S.D.N.Y. 1993) (“In bankruptcy, 

multiple recoveries for an identical injury are generally disallowed.”). Enjoining the 30.7 

Customers from bringing or proceeding with Duplicative Claims against MFGUK is within the 

Court’s power. Section 105(a) of the Bankruptcy Code permits the Court to “issue any order, 

process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 

Such orders include “orders restraining actions pending elsewhere.” See Manville Corp. v. 

Equity Sec. Holders Comm. (In re Johns-Manville Corp.), 801 F.2d 60, 63 (2d Cir. 1986) (citing 

In re Davis, 730 F.2d 176, 183-84 (5th Cir. 1984)). 

55. Accordingly, the Trustee submits that the settlement and compromise 

embodied in the Settlement Agreement is appropriate in light of the relevant factors, is fair and 

equitable, and should be approved. 

56. The Trustee’s entrance into the Settlement Agreement is based on his 

detailed and lengthy investigation and extensive work with the JSAs to develop and share 
22 

62166395_1 

information about MFGI and MFGUK, as well as discussions with the Trustee for the Chapter 11 

Debtors. The proposed settlement avoids the uncertainty, expense and distraction of litigation, 

produces a benefit to the MFGI estate because it increases the funds available for distribution to 

customer and creditors; and protects the MFGI estate from MFGUK’s claims and defenses that 

could prolong litigation and reduce the ultimate recovery. 

VII. NOTICE 

57. Notice of this Motion will be provided pursuant to the Amended Order 

Implementing Certain Notice and Case Management Procedures and Related Relief (ECF No. 

3062) to all parties in interest, including the Duplicative Claimants. In addition, notice of this 

Motion has been published on the website of the Trustee (www.mfglobaltrustee.com). The 

Trustee submits that no other or further notice need be given. 
23 

62166395_1 

WHEREFORE, the Trustee respectfully requests that the Court enter the proposed 

Order attached hereto as Exhibit 3, approving the Settlement Agreement and granting such 

additional and further relief as the Court deems just and appropriate. 

Dated: New York, New York 

December 21, 2012 

HUGHES HUBBARD & REED LLP 

By: /s James B. Kobak, Jr.

 James B. Kobak, Jr. 

 Christopher K. Kiplok 

 Sarah L. Cave 

One Battery Park Plaza 

New York, New York 10004 

Telephone: (212) 837-6000 

Facsimile: (212) 422-4726 

Email: kobak@hugheshubbard.com

Attorneys for James W. Giddens 

Trustee for the SIPA Liquidation of MF 

Global Inc. 
EXHIBIT 1




























EXHIBIT 2
Hughes

Hubbard

Hughes Huhhard O'eed ts.p

One Battery Park Plaza

New York, New York 10004-1482

Telephone: 212-837-6000

Fax: 212-422-4726

hugheshubbard.corn

December 21, 2012

BY HAND

Brett H. Miller, Esq.

Morrison & Foerster LLP

1290 Avenue ofthe Americas

New York, NY 10104

Re: Resolution of Certain Claims ofthe Chapter 11 Debtors in

the SIPA Liquidation of MF Global Inc. (S.D.N.Y.Case

No. 11-2790 (MG) SIPA).

Dear Brett:

As you are aware, we represent James W. Giddens, as trustee (the "SIPA

Trustee" ) for the liquidation of MF Global Inc. ("MFGI") under the Securities Investor

Protection Act of 1970, as amended ("SIPA").

MF Global Holdings Ltd ("Holdinps Ltd."), MF Global Finance USA Inc.

("FinCo"), MF Global FX Clear LLC ("FXClear" ), MF Global Market Services LLC ("Market

Services" ), MF Global Capital LLC ("MFG Capital" ), MF Global Holdings USA, Inc.

(collectively, the "Chapter 11 Debtors" ) timely submitted securities customer claims,

commodity customer claims and/or general creditor claims (each a "Chapter 11 Claim," and

collectively, the "Chapter 11 Claims" ) against the MFGI estate. MF Global Special Investor

LLC ("Special Investor" ), MF Global Assurance Company Ltd. ("Assurance" ) and MF Global

FX LLC ("FXLLC") also timely submitted timely submitted securities customer claims, and/or

general creditor claims against the MFGI estate (each an "Affiliate Claim," and collectively, the

"Affiliate Claims" ). The SIPA Trustee made determinations as to certain ofthe Chapter 11

Claims and Affiliate Claims for customer property and issued Letters of Determination for each,

but did not make determinations for any general estate claims filed by the Chapter 11 Debtors,

Assurance and FX LLC. Louis J. Freeh, as Trustee (the "Chapter 11 Trustee" ) ofthe Chapter 11

Debtors, has filed objections to certain letters of determination and has been granted extensions

to object to the remaining letters of determination.

The SIPA Trustee timely filed a general creditor claim against several Chapter 11

Debtors (each an "MFGI Claim," or collectively, the "MFGI Claims" ). The Chapter 11 Trustee

has not made any determinations as to the MFGI Claims.

This letter agreement (the "Agreement" ) serves to memorialize our accord,

understanding and resolution regarding the determinations and procedure for all but ten ofthe

Chapter 11 Claims and one unliquidated MFGI claim. This Agreement fully resolves the

New York ~ Washington, D.C. ~ I os Angeles ~ Miami ~ Jersey City ~ Kansas City ~ Paris ~ Tokyo
following Chapter 11 Claims and Chapter 11 Affiliate Claims: 900021287, 900021262,

900021277, 900021263, 900021274, 900021285, 900021286, 900021282, 900021283,

900021284, 900021288, 900021272, 900021278, 900021271, 900021273, 900021275,

900021276, 700000429, 700000428, 700000442, 700000443, 700000431, 700000441,

700000444, 700000458, 700000430, 700000432, 700000433, 700000434, 700000435,

700000436, 700000437, 700000438, 700000439, 700000440, 700000445, 700000446,

700000447, 700000448, 700000449, 700000450, 700000451, 700000452, 700000453,

700000454, 700000455, 700000456, 700000457, 5484, 5485, 5486, 5487, 5488, 5489, 5490,

5491, 5492 and 5493 (collectively, the "Resolved Chapter 11 Claims" ). The following ten

Chapter 11 Customer Claims are being held open pending receipt of instructions for final

treatment, and are not the subject ofthis Agreement: 900021264, 900021265, 900021266,

900021267, 900021268, 900021269, 900021270, 900021279, 900021280 and 900021281 (all

submitted by FinCo as Coinmodities Customer Claims) (collectively, the "Held Open Chapter 11

Claims" ). The Held Open Chapter 11 Claims all pertain to contractual liens claimed by FinCo

on the accounts of MFGI's former public commodity customers, for which claims the Chapter 11

Trustee and the individual former account holders are continuing to use best efforts to address

final distributions. The SIPA Trustee and the Chapter 11 Trustee have agreed that the amounts

claimed in the Held Open Chapter 11 Claims are not separate from the amounts claimed by the

former account holders and, as such, the SIPA Trustee is not required to reserve for both claimed

amounts except and to the extent that the amount claimed by the Chapter 11 Trustee in the name

of such former commodity customer exceeds the undistributed portion of a former public

commodity customers'llowed claim. The parties hereto (the "Parties" ) agree that the SIPA

Trustee will accept valid instructions from the former account holders, as approved by the

Chapter 11 Trustee, for the distribution ofthese former accounts pending the resolution ofthe

Chapter 11 Trustee's negotiations with those former account holders.

This Agreement settles the Resolved Chapter 11 Claims, including determinations

ofthe amounts allowed as commodity customer claims, securities customer claims and general

estate claims. This Agreement binds the Chapter 11 Trustee and the SIPA Trustee to the

determinations set forth below and extinguishes the Chapter 11 Trustee's right to object to or

contest the determinations ofthe Resolved Chapter 11 Claims in any manner.

A.

The agreed upon final resolution ofthe Resolved Chapter 11 Claims is as follows:

Resolution of Chapter 11 Claims for Commoditv Customer Propertv:

Claim No. 900021287: submitted by FinCo in an unspecified amount only —this

Claim is denied. i

Claim Nos. 900021262 and 900021277: submitted by FX Clear in the aggregate

amount of $ 1,242.66 plus an unspecified amount —these Claims are allowed in

the aggregate amount of $1,242.66 as a Non-Public Customer Claim in the

1. For clarity, all claims filed as Chapter 11 Customer Claims in an unliquidated or unspecified amount other than

claim number 700000428, are denied.

2. The term "Non-Public Customer" shall have the meaning ascribed to it in 17 C.F.R. $ 190.01(cc)("Non-public

customer means any person enumerated in the definition of Proprietary Account in $ 1.3 or $31.4(e)ofthis
futures account class only.

Claim Nos. 900021263, 900021274, 900021285 and 900021286: submitted by

Market Services in the aggregate amount of $81,005,475.19plus an unspecified

amount —these Claims are allowed in the aggregate amount of $31,607,920.11as

a Non-Public Customer Claim in the futures account class only.

Claim Nos. 900021282, 900021283, 900021284 and 900021288: submitted by

MFG Capital in the aggregate amount of $29,132,060.77—these Claims are

allowed in the aggregate amounts of $28,185,748.68 as a Non-Public Customer

Claim in the futures account class only and $101,730.30as a Non-Public

Customer Claim in the foreign futures account class only.

Claim Nos. 900021272 and 900021278: submitted by Special Investor in the

aggregate amount of $ 140,841.41 plus an unspecified amount —these Claims are

allowed in the aggregate amount of $83,815.91as a Non-Public Customer Claim

in the futures account class only.

6. Claim Nos. 900021271, 900021273, 900021275 and 900021276: submitted by

Holdings Ltd. in unspecified amounts only —these claims are denied.

Resolution of Chapter 11 Claims for Securities Customer Propertv:

Claim Nos. 700000429 and 700000445: submitted by FinCo in the aggregate

amount of $ 127,151,670.05(and later amended to $ 177,715,443.11)plus an

unspecified amount —these Claims are allowed in the aggregate amount of

$63,500,000.00 broken down as follows:

(a) an allowed claim for $29,918,812.27as a Securities Customer Claim only;

and

(b) an allowed claim for $33,581,187.73 as an Unsecured General Creditor

Claim only.

Claim No. 700000428: submitted by MFG Capital in an unspecified amount only

—this Claim is allowed in the amount of $1,186,113.27as a Securities Customer

Claim only.

9. Claim Nos. 700000442 and 700000443: submitted by FX Clear in unspecified

amounts only —these Claims are denied.

10. Claim No. 700000431: submitted by Market Services in an unspecified amount

chapter, any person excluded from the definition of "foreign futures or foreign options customer" in the proviso

to section 30.1(c)ofthis chapter, or any person enumerated in the definition of Cleared Swaps Proprietary

Account in $22.1 ofthis chapter, in each case, if such person is defined as a 'customer'nder paragraph (k) of

this section."), and pursuant to 17 C,F.R. $ 190.08(b)("No portion of the customer estate may be allocated to

pay non-public customer claims until all public customer claims have been satisfied in full."), For the purposes

of clarity, the Parties agree that no Non-Public Customer claim shall be paid unless and until the Public

Customers (as the term is used in 17 C.F.R. $ 190, ct. seq.) are paid in full.
only —this Claim is denied.

Claim Nos. 700000441, 700000444 and 700000458; submitted by Holdings Ltd.

in the aggregate amount of $77,332,223.00 plus an unspecified amount —these

Claims are allowed in the aggregate amount of $3,895,074.46 as a Securities

Customer Claim only.

C. Resolution of Affiliate Claims for Securities Customer Propertv:

12. Claim Nos. 700000430, 700000432„700000433, 700000434, 700000435,

700000436. 700000437, 700000438. 700000439. 700000440, 700000446,

700000447, 700000448, 700000449, 700000450, 700000451. 700000452,

700000453, 700000454, 700000455, 700000456 and 700000457: submitted by

Special Investor in the aggregate amount of $352,061,741.16—these Claims are

allowed in the aggregate amount of $43,76S,836.00 as an Unsecured General

Creditor Claim only.

D. Resolution of Chapter 11 Claims for General Estate Propertv:

13. Claim No. 5489: submitted by Holdings Ltd. in the amount of $38,720,558.00—

this Claim is allowed in the amount of $55,492,687.26 as an Unsecured General

Creditor Claim only; provided, however, after setoff ofthe allowed MFGI claim

against Holdings Ltd. referenced in paragraph 22 below, the Claim shall be

allowed in the reduced amount of $48,712,140.49.

14. Claim Nos. 5486 and 5488: submitted by Holdings USA in the aggregate amount

of $36,585,647.00 plus an unspecified amount —these Claims are allowed in the

aggregate amount of $39,405,631.00as an Unsecured General Creditor Claim

only; provided, however, after setoff ofthe allowed MFGI claim against Holdings

USA referenced in paragraph 22 below, these Claims shall be allowed in the

reduced aggregate amount of $33,656,292.42.

15.

16.

Claim Nos. 5486; submitted by Holdings USA in the aggregate amount of

$ 130,000,000.00—this Claim is allowed in the aggregate amount of

$130,000,000.00as an Unsecured General Creditor Claim that is be subordinated

for to all other allowed Unsecured General Creditor Claims for distribution

purposes. For the avoidance of doubt, Holdings USA shall not be entitled to

receive a distribution on account ofthis claim until all allowed unsubordinated

Unsecured General Creditor Claims have been paid in full.

Claim Nos. 5492 and 5493: submitted by FinCo in the aggregate amount of

$991,496,127.00—these Claims are allowed in the aggregate amount of

$991,496,127.00as an Unsecured General Creditor Claim only; provided,

however, after setoff ofthe allowed MFGI claim against FinCo referenced in

paragraph 24 below, these Claims shall be allowed in the reduced aggregate

amount of $989,S02,613.89.

17. Claim No. 5491:submitted by FinCo in the aggregate amount of $470,000,000.00

—this Claim is allowed in the aggregate amount of $470,000,000.00 as an
Unsecured General Creditor Claim that is be subordinated for to all other allowed

Unsecured General Creditor Claims for distribution purposes. For the avoidance

of doubt, FinCo shall not be entitled to receive a distribution on account ofthis

claim until all allowed unsubordinated Unsecured General Creditor Claims have

been paid in full.

18. Claim No. 5490: submitted by MFG Capital in the amount of $3,733,828.00—this

Claim is allowed in the aggregate amount of $3,733,828.00 as an Unsecured

General Creditor Claim only; provided, however, after setoff ofthe allowed

MFGI claim against MFG Capital referenced in paragraph 25 below, the Claim

shall be allowed in the reduced amount of $3,044,660.15.

19. Claim No. 5487: submitted by FX Clear in the amount of $398,448.00 plus an

unspecified amount —this Claim is allowed in the amount of $398,448.00 as an

Unsecured General Creditor Claim only; provided, however, after setoff ofthe

allowed MFGI claim against FX Clear referenced in paragraph 27 below, the

Claim shall be allowed in the reduced amount of $311,014.31.

20, Claim No. 5484: submitted by FX LLC in the amount of $29,300.00 plus an

unspecified amount —this Claim is allowed in the amount of $29,300.00 as an

Unsecured General Creditor Claim only.

21. Claim No. 5485: submitted by Assurance in the amount of $2,740.00 —this Claim

is allowed in the amount of $2,740.00 as an Unsecured General Creditor Claim

only

Resolution of MFGI Claims for General Estate Property;

22. Claim submitted by MFGI against Holdings Ltd, for $40,211,374.00plus an

unspecified amount —this Claim is allowed in the amount of $6,780,546.77 as an

Unsecured General Creditor Claim only.

23. Claim submitted by MFGI against Holdings USA for $34,095,894.00—this Claim

is allowed in the amount of $5,749,338.58 as an Unsecured General Creditor

Claim only.

24. Claim submitted by MFGI against FinCo for $ 10,043,215.00—this Claim is

allowed in the amount of $1,693,513.11as an Unsecured General Creditor Claim

only.

25. Claim submitted by MFGI against MFG Capital for $4,087,043.00 —this Claim is

allowed in the amount of $689,167.85 as an Unsecured General Creditor Claim

only.

26. Claim submitted by MFGI against Market Services for $ 165,276.00—this Claim

is disallowed.

27. Claim submitted by MFGI against FX Clear for $518,517.00—this Claim is

allowed in the amount of $87,433.69 as an Unsecured General Creditor Claim
only.

Except as specifically set forth herein, the Resolved Chapter 11 Claims shall not

be subject to setoff by the SIPA Trustee against general unsecured claims MFGI filed against the

Chapter 11 Debtors.

Except as specifically set forth herein, the Resolved Chapter 11 Claims shall not

be subordinated to any claim filed against MFGI in the SIPA proceeding and the SIPA Trustee

will oppose any third party seeking to subordinate the Resolved Chapter 11 Claims.

The allowed Securities Customer Claims of FinCo, Holdings Ltd. and MFG

Capital shall rank pari passu with all other allowed Securities Customer Claims against the

MFGI estate; and the SIPA Trustee shall cause his professionals to make a true-up distribution

equal to the initial distribution paid to holders of similarly allowed Securities Customer Claims

as soon as practicable, but no later than five (5) business days after receipt of the fully executed

Agreement.

Upon counter-execution of this Agreement, the Chapter 11 Trustee will promptly

withdraw the pending objections to the SIPA Trustee's determinations of the Chapter 11 Claims

in the SIPA proceeding.

The Chapter 11 Trustee agrees to withdraw the litigation commenced on behalf of

Holdings Ltd. and FinCo against MF Global UK Ltd. ("MFGUK") in an amount not less than

$237.5 million, subject to the special administrators of MFGUK (i) admitting the Chapter 11

Debtors'laims filed against MFGUK, (ii) resolving the TPR claim percentage to be paid by the

Chapter 11 Debtors'K affiliates and (iii) resolving the memorandum of understanding

pertaining to the protocol for upstreaming distributions for the Chapter 11 Debtors'est of world

affiliates.

The Chapter 11 Trustee agrees in principle to support the allocation of or loan

from MFGI unallocated property sufficient to pay 100% of net equity claims of commodities and

securities customers; provided, however, that the SIPA Trustee shall provide the Chapter 11

Trustee with an explanation of the estimated amount of claims against, assets in and shortfall for

each pool of customer property in support of the requested allocation or loan amount; provided

further, however, that any motion or order providing for such allocation shall (i) be reasonably

acceptable to the Chapter 11 Trustee; (ii) provide for the allocation or loan of sufficient general

estate assets to pay 100% of each of the Chapter 11 Debtors'llowed claims for commodities

and securities property, as set forth in Sections A and B herein; (iii) be structured in a manner so

that (A) customer rights and recoveries, to the extent then pending, against any defendant to a

lawsuit (i.e.,JPMorgan Chase, insurers, class action defendants or any other party) are preserved,

and (B)the MFGI general estate shall be subrogated to such customer rights and recoveries; and

(iv) provide that any funds recovered from any source after any such reallocation or loan shall be

deemed general estate assets. Upon Bankruptcy Court approval of the allocation order, the

MFGI unliquidated claim filed against the Chapter 11 Debtors'hall be deemed withdrawn and

expunged The Chapter 11 Debtors'fficial committee of creditors and ad hoc committee of

creditors are not parties to this Agreement and therefore, the SIPA Trustee and the Chapter 11

Trustee agree that whatever rights such committees may have with respect to objecting to or

supporting any motion or order referenced in this paragraph are reserved.
Upon Bankruptcy Court approval of the reallocation order, the MFGI

unliquidated claim filed against the Chapter 11 Debtors'hall be deemed withdrawn.

The Chapter 11 Trustee and the SIPA Trustee agree to cooperate on and

maximize recoveries from the Dooley insurance claim and other matters, including taxes, and

further agree to share information to maximize efficiencies and limit the costs to their respective

estates, particularly to the estate producing such information. The Chapter 11 Trustee and the

SIPA Trustee agree that no public or media statement regarding this Agreement shall be made

without prior consultation with and consent from each other, which consent shall not be

unreasonably withheld.

'ames B.Kobak, Jr.

Counsel to James W. Giddens,

SIPA Trustee for the Liquidation of

MF Global Inc.

Agreed to and Accepted:

Brett Miller

Counsel to Louis J. Freeh,

Chapter 11 Trustee for

MF Global Holdings Ltd., et. al.

EXHIBIT 3
62155256_3 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF NEW YORK 

In re 

MF GLOBAL INC., 

Debtor. 

Case No. 11-2790 (MG) SIPA 

[PROPOSED] ORDER APPROVING SETTLEMENT AGREEMENT 

BETWEEN THE DEBTOR, THE TRUSTEE, MF GLOBAL UK LIMITED (IN SPECIAL 

ADMINISTRATION) AND THE MFGUK JOINT SPECIAL ADMINISTRATORS

Upon the motion dated [December 21, 2012] (the “Motion”)1 of James W. 

Giddens (the “Trustee”), as Trustee for the liquidation of the business of MF Global Inc. 

(“MFGI” or the “Debtor”) pursuant to the Securities Investor Protection Act (“SIPA”), for an 

order pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy 

Rules”) approving the settlement and compromise (the “Settlement Agreement”) entered into by 

MFGI, the Trustee, MF Global UK Limited (in administration) (“MFGUK”) and the MFGUK 

Joint Special Administrators Richard Heis, Richard Fleming and Michael Pink (the “JSAs”, 

collectively with MFGI, the Trustee and MFGUK, the “Parties”); and the Court having 

jurisdiction to consider the Motion and the relief requested therein in accordance with SIPA 

§ 78eee(b)(4); and venue being proper before this Court pursuant to SIPA § 78eee(a)(3) and 15 

U.S.C. § 78aa; and 

Upon consideration of the Motion, any objections thereto, briefs and arguments of 

counsel, and due and proper notice of the Motion having been provided, including in accordance 

 

1. Capitalized terms not defined herein or in the Motion shall have the meaning ascribed to them in the Settlement 

Agreement. 
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with the Amended Case Management Order, to all parties in interest, including the Duplicative 

Claimants, and it appearing that the notice of the Motion is sufficient, adequate, and timely under 

the circumstances of this case and that no other or further notice need be provided; and a 

reasonable opportunity to object or be heard regarding the Motion having been given to all such 

parties; and a full and fair opportunity having been afforded to litigate all issues raised in all 

objections, or which might have been raised, and all objections having been fully and fairly 

litigated; 

 IT IS HEREBY FOUND AND DETERMINED THAT: 

A. The Parties have engaged in proceedings before the English High Court including 

substantial briefing with respect to the MFGI 30.7 Client Asset Claim and the RTM element of 

the MFGI Agreed Claims, together with substantial discovery in relation to the MFGI 30.7 Client 

Asset Claim, which are among the claims now being settled pursuant to the Settlement 

Agreement. Those proceedings, and in particular the 30.7 Application, involved the filing of 

multiple substantive briefs, propounding extensive document requests on each other, and 

collectively producing and reviewing hundreds of thousands of pages of documents from dozens 

of custodians. 

B. In evaluating the reasonableness of the settlement, the Court has taken into 

consideration the evidence before the Court. 

C. After careful consideration of the record, the Court finds that the settlement of 

MFGI’s and MFGUK’s Claims against each other as described and in the amounts reflected in 

the Settlement Agreement is within the range of reasonableness. The Court has canvassed the 

issues to evaluate the reasonableness of the settlement and finds that: 

a) a full litigation of the Claims resolved by the Settlement Agreement 

would be extremely complex, protracted and expensive, and would 
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62155256_3 

significantly delay the Trustee’s ability to make distributions to 

customers and creditors of the MFGI estate and to complete the 

MFGI SIPA proceeding; 

b) the Settlement Agreement is in the best interests of the MFGI estate, 

its customers and creditors, and is supported by good business 

reasons; 

c) customers and creditors of the MFGI Estate and other parties in 

interest have demonstrated support for the Settlement Agreement; 

d) both the Trustee’s counsel and the JSAs’ counsel have substantial 

experience and are competent in advising on complex bankruptcy and 

litigation matters and in negotiating commercial resolutions thereof; 

and 

e) the Settlement Agreement was negotiated, proposed, and entered into 

by the Trustee and the JSAs without collusion, in good faith, and from 

arm’s length bargaining positions. 

D. Each of the releases provided for in the Settlement Agreement, and the 

injunctions contained in this Order, (i) is within the Court’s jurisdiction, (ii) is essential to 

administering the MFGI estate, (iii) is an integral element of the Settlement Agreement and/or to 

its effectuation, (iv) confers material benefits on, and is in the best interests of, the MFGI estate, 

and (v) is essential to the overall objectives of the Settlement Agreement. 

E. It is in the best interests of the MFGI estate, its customers and creditors for the 

Trustee to make further distributions and to complete the SIPA liquidation proceedings of MFGI 

as promptly as possible. See SIPA § 78fff(a)(1). To this end, it is in the best interests of the 

MFGI estate, its customers and creditors for the Trustee to resolve MFGI’s and MFGUK’s 

respective Claims against each other as promptly as practicable and in a consensual manner. 

Indeed, the Trustee is unable to make meaningful additional distributions to customers, or any 

distribution from the general estate, without resolving these Claims. 

F. The Settlement Agreement reflects an integrated and comprehensive settlement of 

MFGI’s and MFGUK’s Claims against each other, and each component and protection contained 
4 

62155256_3 

therein and in this Order, including the releases and injunctions, are an integral part thereof. The 

entry of this Order as a Final Order as described in the Settlement Agreement is necessary for the 

Settlement Agreement to become effective and achieve its goals, which are in the best interests 

of the MFGI estate. 

G. The Settlement Agreement brings greater certainty to the MFGI Estate and will 

permit the Trustee to make substantial progress toward completion of the SIPA liquidation of 

MFGI. 

H. Those customers of MFGI who have submitted Claims against the MFGI 30.7 

commodities estate and/or who have submitted or in the future submit Claims against MFGUK 

in respect of the MFGUK/MFGI Futures and Options Business (such Claims being “Duplicative 

Claims”), are subject to the jurisdiction of this Court and are therefore appropriately and 

completely bound by this Order. 

I. The Court finds that customer claims in respect of the MFGUK/MFGI Futures 

and Options Business are best resolved with the Trustee in this Court, and not against MFGUK 

and/or the JSAs in any other forum. The Court acknowledges that it is necessary, to achieve the 

settlement reflected in the Agreement, that Duplicative Claims be released in their entirety so 

that reserves by the JSAs in respect of the Duplicative Claims no longer need to be maintained. 

J. The Court takes notice that it is a Condition of the Settlement Agreement that the 

Holdings/FinCo Claim has been withdrawn, a notice of discontinuance has been served on 

MFGUK and filed with the High Court in respect of the Holdings/FinCo Proceedings, and 

MFGUK has received a release signed on behalf of each of Holdings and FinCo by which 

Holdings and FinCo irrevocably waive and release (on terms satisfactory to MFGUK) all claims 
5 

62155256_3 

they may have against MFGUK and the JSAs other than the Agreed Holdings/FinCo Claims and 

any additional claims as otherwise agreed between the Chapter 11 Trustee and the JSAs. 

K. The Court takes notice that it is a Condition of the Settlement Agreement that 

JPMorgan Chase has unconditionally withdrawn the JPMorgan Chase Claim and paid MFGUK 

the MFGUK Receivable, and JPMorgan Chase and JPMorgan Chase & Co. have unconditionally 

agreed to, and have irrevocably waived and released (on terms satisfactory to MFGUK), all 

claims they may have against MFGUK and the JSAs in respect of the JPMorgan Chase Claim 

and/or arising from or in respect of the Wire Transfer. 

NOW THEREFORE, IT IS HEREBY ORDERED THAT: 

1. The Motion is granted in all respects and the Settlement Agreement2 is authorized 

and approved pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. 

2. Upon the occurrence of the Effective Date, the Trustee is authorized and directed 

to make the distributions to MFGUK set forth in Section 5.3 of the Settlement Agreement in 

accordance with and subject to the terms thereof. 

3. Upon the occurrence of the Effective Date, in accordance with and subject to the 

terms of the Settlement Agreement the Parties are permanently enjoined from pursuing in any 

manner any Claims that are released pursuant to the Settlement Agreement. 

4. Upon the occurrence of the Effective Date, the MFGUK Agreed Claims against 

MFGI are allowed and satisfied in accordance with and subject to the terms of the Settlement 

Agreement. 

 

2. The exhibits and schedules that are incorporated by reference into the Settlement Agreement are all approved. 
6 

62155256_3 

5. Upon the occurrence of the Effective Date, the mutual Releases in the Settlement 

Agreement are approved in accordance with and subject to the terms thereof. 

6. Upon the occurrence of the Effective Date, the Trustee is authorized and directed 

to take any necessary or appropriate action to bring an end to any legal proceedings in the UK. 

7. Upon the occurrence of the Effective Date, the Parties shall promptly file on the 

Court’s docket notice thereof. 

8. The transfer of assets in accordance with and subject to the terms of the 

Settlement Agreement will be a legal, valid, and effective transfer of all of the legal, equitable 

and beneficial right, title and interest in those assets, and free and clear of all liens, Claims, and 

encumbrances. 

9. All Persons are prohibited and enjoined from taking any action to adversely affect 

or interfere with the ability of the Parties to transfer property and Claims pursuant to and subject 

to the terms of the Settlement Agreement. 

10. All Duplicative Claimants and any persons claiming for, through or under any 

Duplicative Claimants, are permanently enjoined from: (i) submitting, commencing, conducting, 

or continuing any claim, suit or proceeding, with respect to the Duplicative Claims, against 

MFGUK or the JSAs in any U.S. state or federal court, in MFGUK’s Special Administration 

and/or in any foreign court or foreign proceedings, (ii) levying against or attaching the property 

MFGI is receiving from MFGUK as described in the Settlement Agreement in any U.S. state or 

federal court and/or any foreign court, or (iii) creating, perfecting or enforcing any purported 

encumbrance in the United States against the property MFGI is receiving from MFGUK as 

described in the Settlement Agreement. 
7 

62155256_3 

11. Future payments by the Trustee from the MFGI 30.7 commodities estate to any 

MFGI 30.7 commodities customer with an allowed claim with a value greater than $12,000 are 

conditional on an appropriate release of all Claims which are Duplicative Claims or which, when 

made, would be Duplicative Claims being given by such customer in favor of MFGUK and the 

JSAs. 

12. Upon the occurrence of the Effective Date, all provisions of the Settlement 

Agreement shall be binding on the Parties. The failure to specify any particular provision of the 

Settlement Agreement in this Order shall not diminish or impair the effectiveness of such 

provision, it being the intent of the Court that the Settlement Agreement be authorized and 

approved in its entirety. 

13. The Parties have full authority to execute the Settlement Agreement. 

14. The Parties are hereby authorized to take any necessary or appropriate steps to 

effectuate the terms of the Settlement Agreement. 

15. Any objections to the Motion that have not otherwise been withdrawn or resolved 

are overruled. 

16. The Court shall retain jurisdiction to hear and determine all matters arising from 

or related to this Order, except for matters reserved for the English Court as provided in the 

Settlement Agreement. 
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17. This Order shall be effective and enforceable immediately upon entry and shall 

constitute a final order within the meaning of 28 U.S.C. § 158(a). To the extent applicable, 

Bankruptcy Rule 6004(h) is hereby waived. 

Dated: New York, New York 

 _________________ 

 ____________________________________ 

 HONORABLE MARTIN GLENN 

 UNITED STATES BANKRUPTCY JUDGE