United Kingdom


  • Service: Advisory, Transactions & Restructuring
  • Industry: Financial Services
  • Type: Business and industry issue
  • Date: 14/06/2012

MF Global UK - Hindsight Application update 

5 February 2013 Update


  • This update concerns the Administrators’ Hindsight Application.


Following the substantive hearing on 30/31 October 2012, the High Court handed down judgment in the Hindsight Application on 29 January 2013.  The Court ruled that “the hindsight principle is not applicable to the determination of claims to client money for the purposes of a distribution under CASS 7A [of the FSA Client Asset Sourcebook]". Accordingly, for distribution purposes, clients’ client money entitlements shall be calculated with reference to 31 October 2011, which is the date of the primary pooling event (PPE) for MFGUK.


The order states:


“For the purposes of calculating a client's client money entitlement in accordance with CASS 7A2.4R and CASS 7A2.5R, an open position is to be valued as at the PPE by reference to the amount which MFGUK would have been liable (ignoring any non-cash collateral held) to pay to the client (or the client to MFGUK) if the open position had been liquidated and his account closed at the closing or settlement prices published by the relevant exchange or other appropriate pricing source on 31 October 2011.”


Neither the Administrators, the representative parties, nor the FSA have sought leave to appeal this decision.  However, if a client who is affected by the decision wishes to appeal it, they may do so if they file their appeal notice with the Court on or before 19 February 2013.  Any appeals should be served on the Administrators.  Please note that a client who appeals this decision will be at risk for costs. Further, any appeal will likely delay the Administrators’ ability to make further distributions of client money. 


If you have any questions regarding the judgment itself or the implications thereof, please direct any enquiries to the Administrators by emailing mfglobalclaims@kpmg.co.uk or call the Administrators on +44 20 7785 0308. Following the judgment, the respondent parties will no longer be fielding communications in this regard.


A copy of the judgment and the sealed order can be found below.



Practical Implications of the Hindsight Judgment

What is the hindsight principle?
The Judge described the hindsight principle as “a principle of general application in UK insolvency legislation applicable to creditor claims. Where the amount of a contingent or an unascertained claim must be estimated for the purposes of a distribution or payment out of the estate, and the amount of the claim becomes certain before the distribution or payment, the latter amount will be taken as the claim's value. The process of estimation is designed to value as accurately as possible the prospect of the contingency occurring or the likely amount of the claim. The use of hindsight either removes the need to make the estimate or makes the estimate more accurate and produces what may generally be regarded as fairer values for the purposes of distribution or payment.”
Which clients are affected by the judgment in the Hindsight Application?
The judgment applies to the calculation of client money entitlements, where clients held open positions as at 31 October 2011.  Therefore, it affects those clients asserting a client money entitlement in the special administration and with open positions at that date.


The Administrators have sent letters to the majority of clients (with the exception of a small number of LME clients whose positions were rolled) who they believe have a client money entitlement and are entitled to take part in any interim distribution with respect of client money.  Those letters set out the Administrators’ assessment of the value of client money claims by reference to two alternative values.  As stated above, for distribution purposes, the Administrators will be making distributions with reference to the 31 October 2011 value. 


To date, the Administrators have been making interim client money distributions based on the lower of the two alternative values set out in the Administrators’ letter.  For those clients who received an interim client money distribution based on the “close out value” (as opposed to the 31 October 2011 value), on the basis that it was the lower of the two values set out in the Administrators’ letter, those clients will be entitled to receive a “top-up” distribution to ensure that those clients receive a distribution that is both consistent with the hindsight judgment and with the first interim client money distribution.  The Administrators will provide further information in due course as to the timing and method of any such “top-up”.
In order to take part in any interim distribution of client money, the Administrators would like to remind all clients that they must complete and return the Settlement Agreement and Bank Account Confirmation Form enclosed with the Administrators’ letter. If you have not yet returned the documentation to the Administrators, please do so as soon as possible.  If you have not received a letter from the Administrators in relation to your client money claim or have misplaced it, please email mfglobalclaims@kpmg.co.uk or call us on +44 20 7785 0308.


How will my shortfall claim from the client money pool into the general estate be valued?
The latest Illustrative Outcome Statement published by the Administrators indicates that there will likely be a shortfall from the client money pool.  Given that unsecured creditor and client money entitlements can be valued on different bases by virtue of the Hindsight judgment, there remains an open question as to the basis upon which any shortfall claims should be valued.  The Administrators are currently discussing the various possibilities with their legal advisers, and will update clients and creditors in due course.  It is possible that this (and maybe other) questions may need to be answered in a subsequent application to Court.


25 September 2012 Update

This update relates to the Administrators’ Hindsight Application before the High Court and makes available:


Please note that the Court has scheduled the Hindsight Application to be heard over two days beginning on 30 October 2012.



20 July 2012 Update


On 3 May 2012, the Administrators made an application to the High Court seeking directions on the appropriate valuation date for client money claims where clients held open positions as at 31 October 2011 (the "Hindsight Application").
On 18 June 2012, the Court appointed two respondents to put forward arguments relating to the Hindsight Application on behalf of other clients in their classes.
This update makes available the witness statement submitted to Court on 16 July 2012 by Attestor Value Master Fund LP, as representative respondent for clients who would do worse by the application of hindsight. A copy of the witness statement of Anke Heydenreich is available for download at the bottom of this page.
Please note that Schneider Trading Associates Limited did not submit a witness statement to Court.


25 June 2012 Update


This update concerns the application issued by the Special Administrators on 3 May 2012 seeking directions from the Court regarding the appropriate valuation date for client money claims where clients held open positions as at 31 October 2011 (the "Hindsight Application"). 
Copies of the application notice and supporting evidence can be found near the bottom of this page.
At a directions hearing on 18 June 2012, the Court appointed the following two respondents to put forward arguments relating the Hindsight Application on behalf of other clients in their classes:


  • Attestor Value Master Fund LP as representative respondent representing clients who would do worse by the application of hindsight; and
  • Schneider Trading Associates Limited as representative respondent representing clients who would do better by the application of hindsight.

The Court gave directions including a timetable for the submission of evidence, with a substantive hearing to take place on the first available date after 15 October 2012.  The judgment that the Court will give following the substantive hearing will be binding on all clients who are represented by the above two respondents (i.e.: all clients who would do either better or worse from the application of hindsight).
If you are a client of MF Global UK Limited and would like to contact your appropriate representative respondent's solicitors, please contact:


  • For Attestor Value Master Fund: Simmons & Simmons LLP, CityPoint, One Ropemaker Street, London, EC2Y 9SS, contact Gerard Heyes at gerard.heyes@simmons-simmons.com.
  • For Schneider Trading Associates Limited: MacRae & Co LLP, 59 Lafone Street, Shad Thames, London, SE1 2LX, contact Rob Gaskell at mfglobalenquiries@macraeco.com.

If you have questions or concerns about the Hindsight Application generally, please contact the Administrators at mfglobalclaims@kpmg.co.uk.
Further details are set out in the order which is available to download by clicking the link below.



    14 June 2012 Update


    On 3 May 2012, the Special Administrators made an application to the High Court seeking directions in respect of client money claims, in particular as to the appropriate basis for the valuation of positions which were open as at, 31 October 2011, being the date of appointment of the Special Administrators (the Hindsight Application PDF 4.6 MB).  A witness statement given by Richard Heis, one of the Special Administrators of MF Global UK Limited, was filed with the Court in support of the Hindsight Application on 12 June 2012 (the "Witness Statement"). The purpose of Richard Heis' statement is to provide the Court with some factual context to the question asked in the Hindsight Application. A copy of the Hindsight Application and the supporting Witness Statement of Richard Heis can be found [below / by clicking the links].
    An initial directions hearing has been scheduled by the Court for the 18th June 2012 at 12:00pm , at which it is intended that representative respondents to the Hindsight Application will be appointed by the Court and certain other procedural matters, such as setting the date for the substantive hearing will be dealt with.
    Some of the issues set out in the Hindsight Application are complex and you are therefore encouraged to read the Hindsight Application (PDF 4.6 MB) and the Witness Statement filed in support of it in full. If you have any questions in respect of the Hindsight Application or the Witness Statement or how the Hindsight Application may affect your client money claim, please contact the Special Administrators at mfglobalclaims@kpmg.co.uk.


While every reasonable effort is made to ensure that the information provided on the pages of this website concerning MF Global UK Limited (in Special Administration) and its Joint Special Administrators, MF Global Overseas Limited (in Administration), MF Global UK Services Limited (in Administration) and MF Global Finance Europe Limited (in Administration) and their respective administrators  (together the "MFG UK Estate") is accurate, no guarantees for the currency or accuracy of the website or information therein are made. The pages of this website concerning the MFG UK Estate and related material (or third party information), is provided ‘as is’. It is provided without any representation or endorsement made and without warranty of any kind, whether express or implied.
Please be aware that the MFG UK Estate and KPMG LLP, hereby exclude all liability for any claim, loss, demands or damages of any kind whatsoever (whether such claims, loss, demands or damages were foreseeable, known or otherwise) arising out of or in connection with the use of this website or the information, content or materials included on this website, including without limitation, indirect or consequential loss or damage, loss of actual or anticipated profits, loss of revenue, loss of business, loss of opportunity, loss of anticipated savings, loss of goodwill or loss of reputation. Nothing in this disclaimer excludes or limits the Joint Special Administrators', the Joint Administrators' or MFG UK Estate's liability for fraud or fraudulent misrepresentation or any liability which may not be limited or excluded by law.
The use of this website and any dispute or claim arising out of or in connection with this website (including non-contractual disputes or claims) is governed by English law and you irrevocably submit to the exclusive jurisdiction of the English courts.

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