MF Global Holdings: Chapter 11 Liquidation and 100% Customer Recovery

MF Global Holdings Ltd. and five affiliated entities filed chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York on October 31, 2011 under lead case number 11-15059, the same day the Securities Investor Protection Corporation initiated a parallel SIPA liquidation of futures commission merchant MF Global Inc. The case proceeded on a split track — chapter 11 for the holding-company entities and SIPA for the regulated broker-dealer where customer property had been transferred — and remains in post-confirmation administration more than fourteen years after the petition date.

The holdco estate confirmed a Joint Chapter 11 Plan of Liquidation at an April 5, 2013 hearing, with an Effective Date of June 4, 2013. MF Global Holdings, Ltd. was installed as Plan Administrator for itself, MF Global Finance USA, and MF Global Holdings USA, and Nader Tavakoli was named Litigation Trustee. Distributions on the headline $1.152 billion Class 5B Liquidity Facility Unsecured Claim, monetization of the directors-and-officers and errors-and-omissions insurance towers protecting Jon S. Corzine and other former officers, a multi-year challenge to retroactive U.S. Trustee fee increases under 28 U.S.C. § 1930(a)(6), and a WARN Act class settlement for terminated employees have all played out under that framework. The most recent post-confirmation reports were filed on April 17, 2026, for the quarter ending March 31, 2026.

Debtor(s)	MF Global Holdings Ltd. (6 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of New York
Case Number	11-15059
Petition Date	October 31, 2011
Judge	Hon. Martin Glenn
Plan Type	Joint Chapter 11 Plan of Liquidation
Confirmation Date	April 5, 2013 (hearing); plan filed April 22, 2013
Effective Date	June 4, 2013
Plan Administrator	MF Global Holdings, Ltd.
Litigation Trustee	Nader Tavakoli

Holding-Company Chapter 11 Alongside the MFGI SIPA Liquidation

The October 31, 2011 filings covered six entities: MF Global Holdings Ltd. (Case No. 11-15059), MF Global Finance USA Inc., MF Global Capital LLC, MF Global FX Clear LLC, MF Global Market Services LLC, and MF Global Holdings USA Inc. The futures commission merchant MF Global Inc. — the regulated broker-dealer where the customer-property segregation failure occurred — was not a chapter 11 debtor. Instead, SIPC commenced a SIPA liquidation of MFGI and James W. Giddens was appointed SIPA Trustee for the broker-dealer estate.

Within the holding-company case itself, the U.S. Trustee moved early to install an independent fiduciary at the parent level. Louis J. Freeh of Freeh Sporkin & Sullivan LLP was appointed chapter 11 trustee for the holding-company estate to direct asset recovery and creditor coordination across the parent and affiliates. Freeh later stepped down on the June 4, 2013 Effective Date, when the Plan Administrator structure took over. Bank of America acted as administrative agent for the prepetition revolving credit facility that became the largest unsecured exposure in the case, and was represented by Katten Muchin Rosenman in connection with the resulting bankruptcy claim.

Customer recoveries ran through MFGI/SIPA; estate causes of action against former officers and directors ran through the Litigation Trust under the chapter 11 plan, and post-effective-date recoveries at the holdco depended on assignments from the SIPA Trustee. The holdco never reorganized and never sought to operate.

Customer Funds Shortfall and the MFGAA Recovery Pathway

The underlying event was the customer-property segregation failure at MFGI. The chapter 11 record reflects a sequence of declining shortfall figures as recoveries arrived: the initial estimate at MFGI's collapse was approximately $1.6 billion, the SIPA Trustee's May 5, 2014 determination put the figure at $548.4 million, the Bankruptcy Court's November 5, 2014 Allocation Order fixed it at $560 million, and an October 24, 2015 demand letter referenced $484 million. The Commodity Futures Trading Commission charges brought on June 27, 2013 against MF Global Inc., MF Global Holdings Ltd., Corzine, and former Assistant Treasurer Edith O'Brien alleged that customer property was "improvidently" transferred and that MFGI failed to "secure property" or maintain accurate records of customer holdings.

The CFTC charges and related regulatory findings preceded the MDL customer class action and the officer-and-director suits in which the Litigation Trustee later participated. After Judge Martin Glenn ruled in November 2013 that customers were entitled to recover all of their losses, the SIPA Trustee began a final $6.7 billion payout to former commodities and securities customers in April 2014. The CFTC separately entered a December 23, 2014 order requiring MF Global to pay $1.2 billion in restitution plus a $100 million civil monetary penalty.

The chapter 11 estate's role in that recovery ran through a special-purpose vehicle. On October 2, 2013, the SIPA Trustee assigned the Net Equity Claims to the holding-company estate in exchange for advances "sufficient to repay 100% of Customers' outstanding net equity." That arrangement was formalized on July 24, 2015 through a Sale and Assumption Agreement transferring the Net Equity Claims to MF Global Assigned Assets LLC ("MFGAA"). Total advances funded by MFGAA toward the customer shortfall exceeded $400 million, according to the Lissy Affidavit attaching the underlying agreements. Customers were ultimately made whole on net equity in nominal terms.

Liquidating Plan Architecture and Class 5B Liquidity Facility

The Second Amended and Restated Joint Plan of Liquidation, filed April 22, 2013, was confirmed at the April 5, 2013 hearing and went effective on June 4, 2013 for the parent and three remaining debtors. Jones Day represented the Plan Administrator and MFGAA in post-effective-date matters through partner Bruce Bennett and obtained fast-track confirmation of the plan. Morrison & Foerster attorneys Jane Rue Wittstein and Melissa A. Hager also appeared for the Plan Administrator.

The plan installed MF Global Holdings, Ltd. itself as Plan Administrator for the three remaining debtors — Holdings Ltd., Finco, and Holdings USA — authorized to act post-Effective Date "without any supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules," according to the Plan Administrator's Statement of Undisputed Facts. It also created a Litigation Trust under Nader Tavakoli scheduled to terminate on June 4, 2021, eight years post-Effective Date, and confirmed the assignment structure that funneled SIPA-side customer recoveries through MFGAA.

The principal funded-debt instrument carried into the plan was the $1.152 billion Liquidity Facility Unsecured Claim at Holdings Ltd., designated Class 5B. As of March 31, 2021, the Plan Administrator's Status Report disclosed that distributions on the allowed $1.152 billion claim had reached $842.7 million, with an additional $101.6 million paid against a separately reserved $275 million subordinated allocation derived from intercompany claims against Finance USA. Subordinated claims allowed at Holdings Ltd. totaled $106.2 million and received no distributions. The same report disclosed that Holdings Ltd. asserted a $1,886,930,980 claim against Finance USA, of which the $275 million carve-out was contractually subordinated to Class 5B. As of the March 31, 2021 reporting date, total debtor-affiliate prepetition receivables stood at $1,513,830,733 and total allowed claims against debtor affiliates at $1,513,243,797. A $600 million write-off was recorded against MFGI subordinated debt. Those positions, together with the MFGAA recovery flows from the SIPA estate, funded both Class 5B distributions and the post-effective-date litigation budget.

D&O Insurance Tower and the Customer Settlement With Corzine, Abelow, and Steenkamp

The post-confirmation litigation program ran through the directors-and-officers and errors-and-omissions insurance towers protecting Corzine, former Chief Operating Officer Bradley I. Abelow, former Chief Financial Officer Henri Steenkamp, and other former officers. The combined E&O tower totaled $157.5 million, according to the coverage adversary complaint later filed by the Plan Administrator and MFGAA. The Litigation Trustee filed an early action against Corzine and others under Adversary Proceeding No. 13-01333, after Judge Glenn signaled in March 2014 that the trustee may sue Corzine over the firm's collapse; the suit was filed on April 23, 2013 and consolidated into MDL No. 2338, In re MF Global Holdings Ltd. Investment Litigation, Case No. 11-7866 (Marrero, J., S.D.N.Y.).

A first round of officer-side resolutions came in July 2015, when Corzine and other former officials agreed to settle the consolidated investor lawsuit for $64.5 million, funded out of the D&O policies. A broader settlement followed a year later. On July 20, 2016, the Plan Administrator, Litigation Trustee, MFGAA, the Customer Class representatives, and Sapere CTA Fund L.P. entered into a Stipulation and Agreement of Settlement with Corzine, Abelow, Steenkamp, David Dunne, Vinay Mahajan, and Edith O'Brien. Reuters reported the package as resolving most of the litigation over the MF Global collapse and trade press placed total settlement value at approximately $132 million.

The terms attached to the Lissy Affidavit set out the deal mechanics. The settlement provided $2 million in cash to a Customer Class Escrow Account and a "CFTC Corzine Allocation"/"CFTC Corzine Reserve" mechanic under which any settlement of the parallel CFTC enforcement action funded by the Reserve had to provide that 75% of proceeds be paid to MFGAA and credited to Net Equity Claims, with the remainder routed to the Customer Class Escrow Account and reverting to the Settlement Fund if unclaimed within one year. Funding came from the remaining limits of the D&O and E&O policies, and the Plan Administrator took assignment of the individual defendants' rights against "non-paying carriers." Releases covered claims arising from the MF Global actions, the chapter 11, the SIPA proceeding, the Section 105 adversary, and Net Equity / Customer Class Interest Claims, with carve-outs for the CFTC allocations. Bankruptcy court approval of the settlement followed in late 2016.

The CFTC mechanic locked in shortly afterward. On January 5, 2017, Corzine agreed to a $5 million civil penalty and a lifetime ban on registration with the CFTC, with the agency confirming that the Corzine penalty was personal and not insured. Separately, the estate's professional malpractice action against the firm's former auditor, MF Global Holdings Ltd. v. PricewaterhouseCoopers LLP, settled in March 2017 following a trial in which Corzine defended the European sovereign-debt strategy at the center of MF Global's failure and PwC blamed Corzine for the firm's failure. The estate had earlier closed a $90 million securities class action settlement over allegedly misleading risk-control disclosures, part of an aggregate securities-litigation recovery that reached more than $234 million for investors.

Allied World, Iron-Starr, and Federal: The E&O Coverage Adversary

After the July 2016 customer settlement, three carriers in the E&O tower — Allied World Assurance Company Ltd., Iron-Starr Excess Agency Ltd. (Ironshore/Starr), and Federal Insurance Company — refused to fund the remaining $25 million of policy limits, asserting "insured-versus-insured," "business risk," and uninsurable-restitution defenses. On October 27, 2016, the Plan Administrator and MFGAA filed Adversary Proceeding No. 16-01251 seeking declaratory judgment and breach-of-contract damages compelling the Dissenting E&O Insurers to pay their remaining limits. The supporting Allied World affidavit tied the customer-property shortfall — characterized as a covered "loss" within policy terms — to the controlling occurrence under the policies.

The dispute generated a series of related proceedings as the carriers tested coverage and forum questions. Coverage litigation against Allied World moved through the Southern District of New York under case number 17 Civ. 742, with a January 2017 motion to remand. Allied World was ordered to post a bond following a memorandum opinion in the bankruptcy court, and the bankruptcy court denied a related Heartland motion to dismiss in a parallel coverage line. The bankruptcy court sent a related segment of the dispute to arbitration in Bermuda following a series of procedural battles, and the district court denied an interlocutory appeal of a related ruling. The estate's lead counsel ultimately reported the dispute as resolved with the holdout E&O insurers, closing out the $157.5 million tower as a source of estate recoveries.

UST Fee Constitutional Challenge in Adversary 19-01379

A late-stage contested matter was the Plan Administrator's challenge to the 2017 amendment to 28 U.S.C. § 1930(a)(6) that retroactively raised quarterly U.S. Trustee fees on long-running large cases. The Plan Administrator's Statement of Undisputed Facts described the fee swing for the three remaining debtors. Under the pre-2018 regime in effect from January 1, 2008 through December 31, 2017, large cases paid a quarterly cap of $30,000 per debtor on disbursements of $30 million or more. Under the 2017 UST Notice that took effect for the first quarter of 2018, a 1% fee attached once quarterly disbursements exceeded $1 million, rising once disbursements exceeded $3 million.

The Plan Administrator paid $158,775 in aggregate UST fees from the petition date through the June 4, 2013 Effective Date, versus $423,785 in "Excess Fees" that the same debtors paid for the first quarter of 2018 through the second quarter of 2019 alone under the revised schedule, according to the Plan Administrator's summary judgment papers. The Plan Administrator argued that the retroactive change reduced creditor distributions and could not have been "structured around" because it was announced more than four years after the Effective Date.

Cross-motions for summary judgment were filed on November 21, 2019. Judges Martin Glenn and Stuart M. Bernstein, sitting jointly with the parallel proceedings, granted summary judgment for the U.S. Trustee on April 24, 2020. The Plan Administrator appealed to the Second Circuit (Case No. 20-3863) and filed an amicus brief at the Supreme Court arguing that the underlying retroactive fee statute should not apply to chapter 11 cases with pending or already-confirmed plans. The constitutional question reached the Supreme Court on a parallel track in Siegel v. Fitzgerald and was further addressed in Office of the U.S. Trustee v. John Q. Hammons Fall 2006, LLC, where the Supreme Court held that prospective parity is the appropriate remedy for unconstitutional fee disparities. Adversary Proceeding 19-01379 was closed on November 7, 2024 following a joint notice of dismissal, consistent with the Supreme Court's resolution of the underlying issue.

WARN Act Class Settlement and Long-Tail Plan Administration

A separate employee class action — Thielmann, et al. v. MF Global Holdings Ltd., et al., Adv. Pro. 11-02880 — covered MF Global employees terminated without statutory notice. On May 25, 2016, the Plan Administrator and class representatives filed a joint motion for preliminary approval of a class settlement under Bankruptcy Code § 105 and Rules 7023 and 9019. Judge Glenn entered a preliminary approval order on June 22, 2016. Class counsel comprised Outten & Golden LLP, Klehr Harrison Harvey Branzburg LLP, Lankenau & Miller LLP, and The Gardner Firm P.C., and sought a 40% of settlement fund fee award.

The MDL customer class action ran on a longer arc. Final Judgment was entered in MDL No. 2338 on September 30, 2016 by Judge Marrero, and the MDL was administratively closed on October 21, 2019. The Plan Administrator's Status Report reflects $29.8 million in customer class counsel fees paid through MFGAA, a $12,015,468 MDL settlement payment routed through the same vehicle, a Plan Administration Expenses Reserve of $36.1 million for future operating expenses and professional fees, an MFGAA Expense Reserve of $0.8 million, and a 2019 extension of the Plan Administrator's term through April 5, 2022. The Litigation Trust was scheduled to terminate on June 4, 2021. Quarterly post-confirmation reporting has continued, with the most recent reports filed on April 17, 2026 for the quarter ending March 31, 2026, covering MF Global Holdings Ltd. and the related case numbers 11-15058 and 12-10863.

Key Timeline

Frequently Asked Questions

Was MF Global's broker-dealer subsidiary part of the chapter 11?

No. MF Global Inc. — the futures commission merchant where the customer-property shortfall occurred — was placed into a parallel SIPA liquidation under SIPA Trustee James W. Giddens on October 31, 2011. Only the holding-company parent and five affiliates filed chapter 11 in the Southern District of New York under lead case number 11-15059.

Who served as the chapter 11 trustee for the holdco estate?

Louis J. Freeh of Freeh Sporkin & Sullivan LLP was appointed chapter 11 trustee for the MF Global Holdings estate after the petition date. Freeh stepped down on June 4, 2013, when the Plan Administrator structure under the confirmed Joint Chapter 11 Plan of Liquidation took effect.

Did MF Global customers ever recover their funds?

Customers ultimately received 100% of their net equity in nominal terms. After Judge Martin Glenn ruled in November 2013 that customers were entitled to recover all of their losses, the SIPA Trustee began a $6.7 billion final payout in April 2014 funded in part through assignments to MF Global Assigned Assets LLC ("MFGAA"). MFGAA's advances toward the customer shortfall exceeded $400 million.

What happened in the case against Jon Corzine?

The Litigation Trustee, Plan Administrator, MFGAA, the Customer Class, and Sapere CTA Fund settled with Corzine and five other former officers on July 20, 2016 for an aggregate package of approximately $132 million funded out of the D&O and E&O insurance towers. The CFTC separately imposed a $5 million civil penalty and lifetime trading ban on Corzine in January 2017.

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