Re 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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Before: Hon Harris J in Chambers

Date of Hearing: 6 March 2014

Date of Ruling: 6 March 2014

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R U L I N G

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1.I have before me an application by the liquidators of MF Global Hong Kong Limited (“company”) pursuant to sections 199, 251 and 256 of the Companies Ordinance, and section 56 of the Trustees Ordinance for sanction of various agreements that the liquidators wish the company to enter into which will allow further distributions to be made to clients.

2.The background to the application has been set out in previous decisions, and it is not necessary for me to repeat it here. 

3.The court has made previous orders on 15 December 2011, 15 May 2012, and 25 April 2013 approving interim distributions resulting in a total distribution to clients of HK$1,026,600,000.  The liquidators have completed reconciliations with affiliated companies in the MF Global Group and brokers overseas, as a result notional client monies are now estimated to be HK$1,208,100,000, and qualifying clients’ claims are estimated to be HK$1,207,900,000. 

4.There may be slight adjustments to these figures as a result of exchange rate fluctuations, or pricing information. 

5.I am told that the return to clients is likely to be in the order of 99 cents in the dollar. 

6.The liquidators have reached agreement with overseas affiliates and one independent broker concerning the balance of the accounts between the company and those affiliates and the broker.

7.The liquidators seek the court’s sanction to those agreements and to resolve certain inconsistencies between the agreements and the court’s previous orders, the precise details do not need to be recited. 

8.In my view, the agreements and the order that is sought are uncontroversial and largely deal with matters of accounting and administration.  I will, therefore, make the order sought which is as follows:

(1) Pursuant to Sections 199 and 251 of the Companies Ordinance (Cap 32) and/or Section 56 of the Trustees Ordinance (Cap 29):

1.1 the compromise agreements entered into, or proposed to be entered into, between the Company and MF Australia, MF UK, MF Singapore and MF Holdings (the “Affiliate Agreements”), as exhibited to the Fourth Affidavit of Patrick Cowley, be approved and the Liquidators be authorised to the extent necessary to give effect to and perform these Affiliate Agreements according to the terms of the Affiliate Agreements, notwithstanding any provisions to the contrary in the Orders of this court made on 15 December 2011, 15 May 2012, 25 April 2013 and this present Order; and

1.2 the Liquidators be authorised to enter into a compromise agreement with Polaris (the "Polaris Agreement") on terms which, in their reasonable opinion, are materially no less favourable to the Company than those contained in the Affiliate Agreements and be authorised to give effect to and perform the Polaris Agreement according to the terms of the Polaris Agreement, notwithstanding any provisions to the contrary in the Orders of this court made on 15 December 2011, 15 May 2012, 25 April 2013 and this present order.

(2) The claim of each Qualifying Client to monies held by the Company on behalf of its clients in segregated accounts established under the Securities and Futures (Client Money) Rules (Cap 571I) (the "Client Money") shall be determined by the Liquidators in accordance with section 5 of the Fourth Cowley Affidavit and, unless otherwise ordered by this Court, such determination shall be final and conclusive as regards a Qualifying Client's entitlement in respect of the Client Money pool.

(3) The unallocated balances and expenses which are referred to at section 6 of the Fourth Cowley Affidavit be allocated to the Client Money pool.

(4) Pursuant to Section 256 of the Companies Ordinance (Cap 32), the Liquidators be authorised to transfer and distribute from the Client Money pool a further amount not exceeding HK$110 million (the "Fourth Interim Distribution") to those persons identified by the Liquidators as clients of the Company with a proprietary interest in the Client Money (the "Qualifying Clients") on the terms set out in paragraphs 1.1 - 1.4 of the Order dated 15 December 2011, save that:

4.1 in relation to paragraph 1.2 of the Order dated 15 December 2011, the amounts to be paid to a Qualifying Client shall be calculated by reference to the prevailing foreign exchange rates as at 15 December 2011;

4.2 the term "affiliate", as referred to at paragraphs 1.3 and 1.4 of the Order dated 15 December 2011, shall mean 'in relation to one party, an individual, corporation, partnership or any other form of entity directly or indirectly controlling, controlled by or under the common control with such party or any such entities, directors, officers and employees";

4.3 in relation to paragraph 1.4 of the Order dated 15 December 2011, the term "Provisional Liquidators" used therein shall be read as "Liquidators";

4.4 the term "any other MF Global Group entity", as used at paragraphs 1.3 and 1.4 of the Order dated 15 December 2011, shall be taken to read, "any of its affiliates";

4.5 paragraphs 1.3 and 1.4 of the Order dated 15 December 2011 shall not apply to MF Global Australia Limited ("MF Australia"), MF Global UK ("MF UK"), MF Global Singapore Pte Limited ("MF Singapore"). MF Global Holdings HK Limited ("MF Holdings") or Polaris MF Global Futures Co. Ltd ("Polaris") (together, the "Affiliates and Brokers"); and

4.6 prior to receiving payment, and as a condition for the same, a Qualifying Client (excluding the Affiliates and Brokers) shall, unless it has previously already done so:

4.6.1 complete and return a claim form in a form acceptable to the Liquidators which states the amount, and  explains the basis of the calculation, of the Qualifying Client's claim to the Client Money; and

4.6.2 sign and return a statement prepared by the Liquidators informing the Qualifying Client of its expected total claim to the Client Money.

(5) For the purposes of facilitating the Fourth Interim Distribution and any other future distributions out of the Client Money, the Liquidators are authorised to convert all Client Money that is held in a foreign currency into Hong Kong dollars at the prevailing foreign exchange spot rate as soon as practicable after the date of this Order.

(6) The Liquidators are authorised to execute, deliver, implement and fully perform any and all obligations, instruments, documents and papers and to take any and all actions reasonably necessary or incidental to make the Fourth Interim Distribution.

(7) For the purposes of facilitating any interim distribution payments made by the Liquidators pursuant to the Order dated 15 December 2011, the Order dated 15 May 2012, the Order dated 25 April 2013, the Fourth Interim Distribution and any other future distributions out of the Client Money, the Liquidators are authorised to pool the Client Money and make interim distribution payments on a pari passu basis.

(8) Pursuant to the Order dated 15 May 2012, the costs and expenses of the Liquidators in administering, collecting in and dealing with the Client Money, including the costs of this application and the costs and expenses associated with effecting the Fourth Interim Distribution, be paid out of Client Money prior to any final distribution, and be borne on a pari passu basis by the Qualifying Clients.

(9) Paragraphs 4.1 - 4.71 and exhibits "PC-18", "PC-19", "PC-20", "PC‑21" and "PC‑22" of the Fourth Cowley Affidavit filed in support of this application be redacted or marked 'confidential'.

(10) All transfers and payments made pursuant to this Order shall be validandnotvoidby virtueofs.182oftheCompaniesOrdinance(Cap 32).

(11) There be liberty to apply generally.

Mr Jose Maurellet, instructed by Linklaters, for the Provisional Liquidators of MF Global Hong Kong Limited