The MF Global UK Limited client money pool holds approximately $1 billion of funds, but is facing client money claims in excess of that amount. The Administrators issued the Application so that the Court could determine whether clients should also be able to make unsecured claims against the firm’s general estate and, if so, how those unsecured claims should be calculated.
The parties all agreed that clients’ client money claims are generally based on underlying contractual claims against the firm. The first issue for the Court was whether clients can claim against the general estate for the whole of those contractual claims, or whether they first have to deduct historic and expected future distributions from the client money pool. The Court ruled that clients can only claim against the general estate for so much of their contractual claims (if any) as have not been paid, and are not expected to be paid, from the client money pool.