On Jan. 31, the bankruptcy court overseeing the MF Global liquidation approved a plan that will bring this case much closer to resolution. Following its collapse in October 2011, over 27,000 commodity customer claims totaling $10 billion and more than 1,000 securities customer claims totaling $1.4 billion were filed against MF Global Inc.

These claims consisted of cash and other assets held in margin accounts, physical commodities held for delivery against futures positions, and investments held in brokerage accounts, all of which became unavailable when the company closed its doors.

Further complicating matters was the fact that there was not just one, but several different MF Global bankruptcies. The one of most interest to farmdoc Daily readers is MF Global Inc. (MFGI), which included the US commodity and securities brokerage operations.

The responsibility of the MFGI bankruptcy trustee has been to recover as much as possible for the commodity and securities customers, because these assets belonged to the customers, not MF Global. For this reason the bankruptcy laws give special treatment to these customer-owned assets, and a number of legal experts claim that no one else - including general creditors - should receive anything until these customer claims are satisfied.

However, there also was a bankruptcy filing by MF Global Holdings (Holdings). The responsibility of the Holdings bankruptcy trustee has been to recover as much as possible for the general creditors, who range from office supply vendors to holders of MF Global corporate debt.

Many of these general creditors viewed the assets held in commodity and securities accounts as belonging to the parent company, not the individual account holders, and saw no reason why MGGI account holders should be allowed to go to the front of the line.

A third bankruptcy filing was made by MF Global UK Ltd. (MFGUK), which included MF Global's London-based operations. In MF Global's final days, money was shuttled back and forth between the US and London in a failed attempt to prevent the company's collapse.

Some of these funds were stranded in London when MF Global folded, at which point they became subject to the bankruptcy laws of England, not the US.

For the past 15 months these three groups have been engaged in a tug-of-war over who is entitled to what, including a number of lawsuits and counter-suits. One unfortunate result of these legal battles was that each side needed to hold back a reserve of funds, rather than distribute those funds to claimants.