UPDATE: #PFGBest Trustee Issues Statements & Notice, Files for SIP Return. Hearing Tomorrow 10 AM

#PFGBest Customers

Are you a customer of PFGBest? The CCC is working with regulators and monitoring the court on behalf of PFG customers. At this stage, we are advising customers to gather their statements and prepare for a claims or account transfer process.

Stay tuned to our website for more information.

UPDATE BELOW:

PFGBest issued the following message from the Trustee along with daily account statements for July 12, 2012:

"Peregrine Financial Group. Inc. is being liquidated pursuant to subchapter IV of title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Illinois, Case No. 12-27488 (the "Bankruptcy Case"), and is no longer an operating entity. Please note that this document reflects activity solely as of the date reflected on the statement. Moreover, this document is not a final account statement and is provided to you solely as a courtesy to assist in reconciling your records and should not be deemed an admission or statement of position of the Trustee of Peregrine Financial Group. Inc. regarding the ultimate allowed amount or treatment of your claim in the Bankruptcy Case."

Trustee Files Motion for Release of SIP | Hearing Set for 7/19 @ 10 AM
Trustee Ira Bodenstein filed a motion requesting the Court give him the authority to negotiate for the return of specifically identifiable property ("SIP"--warehouse receipts, etc.).  The motion requests that the Court give him the discretion to shorten and simplify notice to customers who own SIP, only notify SIP customers (not all PFGBest customers), negotiate the release of the property pending a deposit by those customers or force the liquidation of that property.  A Bloomberg story indicates that most of those customers are holding metals receipts.

This motion will not affect the vast majority of PFGBest customers.  Among the revelations in the motion:

  • As of bankruptcy filing, PFGBest had over 24,000 futures customer accounts;
  • Only 11 of those customers have qualified SIP eligible to be returned to them;
  • Notes right of SIP return does not mean the SIP customer is entitled to 100% distribution. SIP Customers "may obtain no more than their pro rata share of  the distribution to its account class under the Part 190 Rules";
  • Requests to shorten the notice period required by the part 190 Rules and limit who receives the notice.  The Trustee doesn't want to confuse 24,000 customers by notifying them of SIP release when only 11 customers have SIP.  He wants to give SIP customers 14 days to either respond to the Trsutee to negotiate the return of their property or have the court give him the authorization to liquidate their property;
  • Requests authority to coordinate the return of SIP with these 11 customers, setting all terms and conditions of how much at his sole discretion.  Essentially the Trustee will tell these customers to send in a specified amount of money to release the property or he will liquidate it;
  • If the Trustee identifies more SIP, it will be subject to the same process;
  • A hearing for the motion is scheduled for tomorrow, Wednesday July 19 at 10 AM.

For more information on what constitutes SIP, please see our Primer on Commodity Bankruptcy for #PFGBest under the "Sub-classes of customer property" heading.  Here are the filings:

Motion

Download (PDF, 831KB)

Proposed Order

Download (PDF, 42KB)

Exhibits

Download (PDF, 244KB)

#MFGlobal Customers

Are you a customer of MF Global? The CCC formally represents more than 200 clients in the bankruptcy process of MF Global on a pro bono basis, and informally represents thousands more in the public domain.

Get the latest news on #MFGlboal.

About John Roe 91 Articles
Co-Founder of the CCC and head of BTR Trading and Roe Capital Management.

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