RE MF GLOBAL HONG KONG LTD

RE MF GLOBAL HONG KONG LTD

The court ordered that Trust Costs be borne pari passu by Qualifying Clients and paid from Client Money (a Berkley Applegate order) and held that Qualifying Clients may prove as unsecured creditors for any shortfall arising from deduction of Trust Costs or from a deficiency in the Client Money pool because the RCA did not exclude liability for a trustee's failure to return trust assets and the Berkley Applegate principle does not preclude recourse against the company for loss caused by the company's breach of duty.

Citation
RE MF GLOBAL HONG KONG LTD
Parties
Company in Provisional and Subsequent Winding Up (applicant): MF Global Hong Kong Limited; Qualifying Client (company in Liquidation): MF Global UK Limited; Sole Shareholder and Creditor (company in Liquidation): MF Global Holdings Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 June 2015
Case Number
HCCW356/2011
Procedural Posture
Companies (winding Up) Proceedings No 356 of 2011 / Chambers Judgment on Application for Berkley Applegate Orders and Provability of Shortfall Claims
Outcome
Application granted; orders made in terms of the summons
Legal Topics
Berkley Applegate Order, Client Money, Trust Costs, Proofs of Debt, Fiduciary Duties, Exclusion Clauses, Liquidator Remuneration
Source Language
EN
Insolvency Trusts Contract Law Equity Procedural Law Berkley Applegate Order Client Money Trust Costs +4 more

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Parties

MF Global Hong Kong Limited

Company in Provisional and Subsequent Winding Up (applicant)

MF Global UK Limited

Qualifying Client (company in Liquidation)

MF Global Holdings Limited

Sole Shareholder and Creditor (company in Liquidation)

Procedural Posture

Companies (winding Up) Proceedings No 356 of 2011 / Chambers Judgment on Application for Berkley Applegate Orders and Provability of Shortfall Claims

Legal Issues

  1. 1 Whether Trust Costs may be borne pari passu by Qualifying Clients and paid out of Client Money prior to distribution
  2. 2 Whether Qualifying Clients may prove as unsecured creditors for any shortfall arising from deduction of Trust Costs
  3. 3 Whether Qualifying Clients may prove for any shortfall arising from a deficiency in the Client Money pool

Ratio Decidendi

The court ordered that Trust Costs be borne pari passu by Qualifying Clients and paid from Client Money (a Berkley Applegate order) and held that Qualifying Clients may prove as unsecured creditors for any shortfall arising from deduction of Trust Costs or from a deficiency in the Client Money pool because the RCA did not exclude liability for a trustee's failure to return trust assets and the Berkley Applegate principle does not preclude recourse against the company for loss caused by the company's breach of duty.

Court Disposition

Application granted; orders made in terms of the summons

Orders

  • Trust Costs to be borne on a pari passu basis by Qualifying Clients and paid out of the Client Money pool prior to any final distribution (Berkley Applegate order)
  • Qualifying Clients entitled to prove as unsecured creditors in the liquidation of MF Global Hong Kong Limited for any shortfall arising from pari passu deduction of Trust Costs from the Client Money pool