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MFGA creditor Jamie Conway said the debacle reflected poorly on Australia's financial services sector at a time when it was trying to position itself as a regional financial hub.
CREDITORS of MF Global Australia, furious at the administrators' slow progress, plan to cut their losses and sell their claims to debt traders headed by UBS. Frustrated by a long process delayed further by a Supreme Court hearing, creditors are opting to take a haircut on their claims rather than wait for administrators Deloitte to return the $313 million they are owed. International investment bank UBS was confirmed last night as a buyer with a bid of 75c in the dollar for the claims of MF Global Australia's former clients. Sources say Macquarie Group is also in the mix, but a spokeswoman would not comment. UBS joins Guy Butler & Co, CRT Capital Group, Longacre Funds Management, Illiquid and others with live bids, ranging between 75c and 80c. Ross Anderson of Anderson's Tax and Investment Services said: "It is disappointing Deloitte have taken this long to recognise the clients' need for liquidity." Mr Anderson has teamed up with Connecticut-based distressed debt trader CRT Capital Group to expedite claims. He said he had fielded inquiries from angry creditors accounting for $40m in the past two days. The latest roadblock to returning client funds has arisen as two of MFGA's institutional clients fight over what method the administrator should use to calculate the returns. George Weston Foods says the administrator should apply gross liquidation value by using closing prices on October 31, when the administrator was appointed. But Graincorp says the administrator should use the prices achieved by the administrator. Sources close to Deloitte say the administrator will circulate details of the process for transferring claims early next week, including a charge of $2500 plus GST for each claim. Critics say that with as many as 10,000 accounts, Deloitte stands to pocket a considerable sum without resolving anything for the creditors. Deloitte has previously said creditors who do not want to sell their claims should not have to bear the cost of those who do. The company says it is bound by the timetables imposed by the court.
According to the US-based brokers Second Market, more than $US325m ($320m) worth of MF Global claims changed hands in March. MFGA creditor Jamie Conway said the debacle reflected poorly on Australia's financial services sector at a time when it was trying to position itself as a regional financial hub. Mr Conway pointed out that all of MF Global's Canadian clients had received 100 per cent of their funds back in December, and that 90 per cent of MF Global's Singaporean clients had already received some payment from a court-approved fund.