KPMG Takes World-First 'Special Administration'
KPMG ADMINISTRATORS have been called in by the Financial Services Authority to handle the world's first special administration of the eighth-largest corporate collapse in history, MF Global UK.
Richard Fleming, Richard Heis and Mike Pink, partners at KPMG, were appointed joint special administrators to the bank following a decision taken by MF's board.
The special administration regime (SAR) was created in February following the collapse of Lehman Brothers.
The SAR process entails the administrators completing three tasks: making a swift return of client assets; timely engagement with authorities; and to rescue the business as a going concern, or to wind it up in the best interests of the creditors. A regular administration involves the latter, but not the first two objectives.
The KPMG administrators are appointed to MF Global UK and MF Global UK Services, which provides employee pension services. It is a wholly-owned subsidiary of MF Global Europe, which is a subsidiary of MF Global.
MF Global filed for Chapter 11 bankruptcy in the US this week.
Fleming said: "Against the backdrop of challenging market conditions and the eurozone crisis, the financial position of MF Global UK has significantly deteriorated in recent weeks. Following the filing for Chapter 11 by MF Global Holdings USA Inc, it would not be viable to operate MF Global UK Ltd on a standalone basis.
"The UK and overseas operations of MF Global UK Limited have ceased trading and the joint special administrators are working with the regulatory authorities, clearing systems and other counterparties in relation to the orderly wind down of the trading operations."
The FSA can direct the special administrators to prioritise certain objectives but must consult HM Treasury and the Bank of England beforehand.
There are currently 725 people employed by the business in the UK with the administrators confirming there will be redundancies shortly.