* Hedge fund resigns from MF Global creditors' committee
* Move comes after Elliott sold its position in MF Global -
* Replaced on committee by grain company
By Nick Brown
July 2 Paul Singer's Elliott Management has
resigned from a committee of MF Global Holdings Ltd
creditors after selling its position in the bankrupt commodities
broker, according to a source close to the matter.
U.S. Trustee Tracy Hope Davis, a regulator charged with
ensuring compliance with bankruptcy laws, on Monday filed court
papers revealing Elliott had been replaced on the committee with
Nebraska-based grain company JE Meuret Grain Co Inc.
The change came after Elliott sold its position in MF Global
and resigned from the committee, said the source, who declined
to be named because the information was not public.
Creditors of bankrupt companies often sell their claims at a
discount to escape the bankruptcy payout process, which can take
years. Buyers of such claims, meanwhile, hope the bankruptcy
process will yield higher payouts than what they paid for the
Elliott's resignation indicates an active market for claims
against MF Global, despite uncertainty over whether the MF
estate holds enough value to provide significant returns to
Elliott, a roughly $20 billion fund, invests largely in
distressed or bankrupt assets, and may itself have acquired its
MF Global positions on the secondary market. The size and nature
of its positions, however, have not been disclosed in court
papers, other than being broadly categorized as either bank
debt, stocks, bonds, or derivatives.
A spokesman for Elliott declined to comment on Monday.
Last year, Elliott led a successful charge to gain
permission from the judge overseeing MF Global's bankruptcy to
continue to buy and sell MF Global positions while serving on
the committee. Judge Martin Glenn granted the request, provided
committee members take steps to avoid conflicts of interest by
separating trading operations from committee activities.
Calls to JE Meuret were not returned.
Resignation from creditors' committees is not common in
bankruptcy. Such committees represent the interest of all
unsecured creditors in a bankruptcy.
Elliott was named to MF Global's creditors' committee in
November, along with Caplin Systems, Wilmington Trust Co, Bank
of America and JPMorgan Chase & Co, the agent
for MF's $1.2 billion credit line.
MF Global went bankrupt in October after its exposure to
European debt spooked investors. Trustees have been appointed to
liquidate the MF Global and its broker-dealer unit, and are
combing through its messy capital structure in hopes of finding
value to reimburse creditors and trader customers still missing
billions of dollars.
The case is In re MF Global Holdings Ltd, U.S. Bankruptcy
Court, Southern District of New York, No. 11-15059.