RE MF GLOBAL HONG KONG LTD

HCCW 356/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 356 OF 2011

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D E C I S I O N

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1.  On 15 December 2011, I made an order on the application of the then joint and several provisional liquidators of MF Global Hong Kong Limited for the court’s sanction to make an interim distribution of an amount not exceeding $500 million from moneys held by the company on behalf of its clients in its segregated bank accounts to clients that have a proprietary interest in such funds. My reasons for making that order are set out in my decision of 15 December.

2.  On 20 March 2012, the provisional liquidators issued a second summons seeking the court’s sanction to make a second interim distribution for an amount not exceeding HK$400 million.  The order that was sought was the same as that which I had made on 15 December 2011, save that a new paragraph was proposed to be inserted in the following terms.  “For the purposes of facilitating any interim distribution, payments made by the provisional liquidators pursuant to the order dated 15 December 2011, the second interim distribution and any other future distributions out of the client money, the provisional liquidators are authorised to pool the client money and make interim distribution payments on a pari passu basis.” 

3.  The summons was listed for hearing on 4 May 2012.  The application came to the attention of the provisional liquidators of MF Global Singapore Pte Limited (“MF Singapore”).  Apparently, they only became aware of the application through MF Global Hong Kong’s website on 27 April 2012.

4.  The proposed addition of the paragraph that I just quoted above apparently caused them some concern and they attended at the hearing on 4 May 2012.  At the hearing, they queried, through counsel, whether or not the way in which clients’ money was to be dealt with was appropriate as they had suggested, as I understand the position, that in the case of at least some of the clients of MF Singapore, it might be possible to trace with precision the assets in which they had a proprietary interest.

5.  The concerns that MF Singapore raised could not be fully aired at the 4 May 2012 hearing and I adjourned the summons until today in order that the liquidators of the respective companies in Hong Kong and Singapore, all of whom are from KPMG, could discuss the matter further and see whether either they could come up with an order that was acceptable to all parties or, if a substantial issue could be identified that needed to be resolved by the court, agree appropriate directions for the matter going forward.

6.  As matters have transpired, I understand from Mr O’Hare who appeared for the provisional liquidators of MF Singapore today, they no longer wish to object to the application and therefore I will make the order that the liquidators of the company seek, which is the same as the order made on 15 December with the addition of the paragraph I have referred to above. 

7.  Mr O’Hare sought his client’s costs of appearing before me.  Although the way in which the provisional liquidators of MF Singapore have come to make representations in relation to the present application has not been entirely satisfactory, I accept that it is not unreasonable for the provisional liquidators of MF Singapore, as representatives of the creditors in Singapore who clearly do have some proprietary claims, to attend court and to raise the type of concerns that were raised at the hearing on 4 May 2012.

8.  I therefore will make an order that the costs of the provisional liquidators of MF Global Singapore Pte Limited of the hearing on 4 May 2012 be taxed and paid out of the client money prior to any final distribution and be borne on a pari passu basis by the qualifying clients.