MF Global UK Services Limited (in administration)

Transcription

1 MF Global UK Services Limited (in administration) Statement of Administrators Proposals under Paragraph 49, Schedule B1 of the Insolvency Act 1986 and Rule 2.33 of the Insolvency Rules 1986 (as amended) 20 December 2011

2 Notice: About this Proposal This Proposal has been prepared by Blair Carnegie Nimmo, Richard Heis, Michael Robert Pink and Richard Dixon Fleming, the Joint Administrators of MF Global UK Services Limited, solely to comply with their statutory duty under paragraph 49, Schedule B1 of the Insolvency Act 1986 to lay before creditors a statement of their proposals for achieving the purposes of the administration order, and for no other purpose. It is not suitable to be relied upon by any other person, or for any other purpose, or in any other context. This Proposal has not been prepared in contemplation of it being used, and is not suitable to be used, to inform any investment decision in relation to the debt of or any financial interest in MF Global UK Services Limited or other companies in the same group. Any estimated outcomes for creditors included in this Proposal are illustrative only and cannot be relied upon as guidance as to the actual outcomes for creditors. Any person that chooses to rely on this Proposal for any purpose or in any context other than under paragraph 49, Schedule B1 of the Insolvency Act 1986 does so at its own risk. To the fullest extent permitted by law, the Joint Administrators do not assume any responsibility and will not accept any liability in respect of this Proposal. Blair Carnegie Nimmo is authorised to act as an insolvency practitioner by the Institute of Chartered Accountants of Scotland. Richard Heis and Michael Robert Pink are authorised to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales. Richard Dixon Fleming is authorised to act as an insolvency practitioner by the Insolvency Practitioners Association. The Joint Administrators act as agents for MF Global UK Services Limited and contract without personal liability. The appointments of the Joint Administrators are personal to them and, to the fullest extent permitted by law, KPMG LLP does not assume any responsibility and will not accept any liability to any person in respect of this Proposal or the conduct of the administration. 1

3 Glossary of terms Act Administrators The Insolvency Act 1986 (as amended) Blair Carnegie Nimmo, Richard Heis, Michael Robert Pink and Richard Dixon Fleming of KPMG LLP Administration Order The Administration Order granted in the Royal Courts of Justice, No of 2011 Company/MFG Services Directors Group HMRC MFG Holdings MFG Inc MFGUK PPF MF Global UK Services Limited Aislinn Marion Shaw, Richard Warren Moore and Simon William Gardiner MF Global Holdings Limited and subsidiaries HM Revenue and Customs MF Global Holdings Limited MF Global Inc (a subsidiary of MFG Holdings and is a US broker-dealer business) MF Global UK Limited (now in Special Administration) Pension Protection Fund Proposals The Administrators Statement of Proposals under Paragraph 49 of Schedule B1 of the Insolvency Act 1986 Rules SIPA SIPC Weil The Insolvency Rules 1986 (as amended) Securities Investor Protection Act Securities Investor Protection Corporation Weil, Gotshal & Manges The references in these Proposals to Sections, Paragraphs or Rules are to the Insolvency Act 1986, Schedule B1 of the Insolvency Act 1986 and the Insolvency Rules 1986 (as amended) respectively. 2

4 Contents Page Executive summary 4 Background and events leading to the appointment of Administrators 6 Management of the Company since appointment 9 Other matters 12 Purpose of administration 14 Costs of administration 19 Proposals 21 Appendices 1. Statutory information 2. Administrators time and cost analysis, including schedule of charge out rates 3. Directors statement of affairs 3

5 Executive summary

6 Executive summary Richard Heis, Michael Robert Pink and Richard Dixon Fleming of KPMG LLP were appointe d as Administrators of MFG Services by the Directors on 31 October Blair Carnegie Nimmo was appointed as Administrator of Services on 19 December The initial administration n order was made on the same day MFGUK entered special administration, and followed the filing for Chapter 11 bankruptcy protection in the US by MFG Holdings and MF Global Finance USA Inc on 31 October Also on 31 October 2011 the SIPC instigated the SIPA liquidatio n of MFG Inc by a petition to the US District Court for the appointmen t of a SIPA trustee. The Company was incorporate d on 1 May 2007, with its principal activi ty being the provision of em ployee services to the Group s UK entities. Our main strateg y at the outset of the administratio n was focuse d on ensur ing that fundin g was available from MFGUK to meet all salary costs in the initial stabilisation period and to agree a staff retention programme based on MFGUK s staffing needs. This provided a wind-down programme that saw the retention of 176 staff throug h to the end of January 2012 and 135 staff through to the end of April 2012, with the prospect of further extensions for each or some of these as the special administratio n of MFGUK develops. We are now focusing on negotiating a management agreement with MFGU K to both meet the costs of the MFG Services administratio n and to incorporat e any management fee that may be appropriate. We have conducte d an initial review of five pensio n schemes operate d by the Company and attende d a meeting of the Trustees of the define d benefit pension scheme. Base d on the expecte d level of realisations, there is a prospect of funds being available for unsecured creditors. However, as set out in this report the Administrators are unable to determin e the timing or quantum of any such distribution. The Administ i trat tors have convened a meeting of creditors pursuant to Paragraph 51 to enable creditors to consider their Proposalsand to dec ide whether a creditors committee should be formed. The meeting will be held at 12:00 noon on 5 January 2012 at Bridewell Hall, St Bride Foundation, Bride Lane, Fleet Street, Londo n EC4Y 8EQ. The Administrators anticipate the need for this Company to remain in administratio n beyon d the expiry of the current order. Accordingly we will apply for an extension at the appropriate time. Creditors will appreciate that the administration is in its early stages, however, based on information available to date the most likely exit route from the administration will either be via dissolution or to move the Company to Creditors Voluntary Liquidation. This document in its entirety constitutes the Administrators Statement of Proposals. A summary list of Proposals is shown on page 22, together with all relevant statutory information include d by way of Appendices. Blair Nimmo Administrator 5

7 Background and events leading to the appointment of Administrators

8 Background and events leading to the appointment of the Administrators Brief history The Company was part of the MFG Holdings Group. It was an operatin g subsidiary of MF Global Holding s Europe Limited, which in turn was a wholly owned subsidiary of MFG Holdings, which is the ultimate parent company. MFG Holdings is a company incorporated in the State of Delaware, USA, whose securities are quo ted on the New York Stoc k Exchange. The main administrative headquarters of the Company is situat ed at 5 Churchill Place, Canary Wharf, London, United Kingdom, E14 5HU. Background The Company formed part of the Group which operate d as a broker-dealer in commodities, fixed income, equities, foreign exchange, futures and options and also provided client financing and securities lending services. The Group operate d globally, with its principal operations located in the US, Australia, Singapore, India, Canada, Hong Kong, Japa n and the United Kingdom. The Company employs all of the employees of the UK entities of the Group and acts as a service company to those entities, primarily for MFGUK. The objects for which the Company was established were to carry on the business of a service company including employing or engaging staff, contractors and such other service providers and for general corporate purposes. The Company is not regulate d by the UK's Financial Services Authority. Events leading up to the appointment of Administrators MFG Holdings filed for protectio n under Chapter 11 of the US Bankrupt cy Code on 31 October 2011; on the same day SIPC instigated the SIPA liquidatio n of MFG Inc by a petition to the US District Court for the appointmen pointment of a SIPA Trustee. We underst stan d these actions were taken followiowi ng the collapse of efforts to sell the MF Global Holdings Group to a third party. During the previous week MFG Holdings share price had droppe d from a starting price of $3.7 0 down to a closing price of $1.20. Furthermore, there was a steady withdrawal of customer funds following an announcement on 25 October 2011 of a significant and unexpected second-quarter loss, which resulted in ratings agencies downgrading MFG Holding s debt. By reason of the developments in the US and the actions of counterparties, exchanges and settlement agents, it becam e clear that MFGUK was likely to become e unabl e to pay its debts. As a result the Directors resolved to place MFGUK into special administration. 7

9 Background and events leading to the appointment of the Administrators (cont.) Events leading up to the appointment of Administrators (cont.) The Directors were aware that the Company s sole customer, being MFGUK, was about to enter special administration, resulting in immediate concer n over payment of monies due to it from intercompany receivables and the prospect of significant unfunded d redundancy costs s if MFGUK wound down. In view of its financial situation, insolvency practitioners from KPMG LLP became involved with the Company on the afternoon of Friday 28 October 2011 when it became apparent to the Directors that insolvency may not be able to be avoided. A team of staff from KPMG LLP and Weil attended at the Company s head office over the weekend ahead of the appointment on Monday 31 October 2011 to commence contingency planning and, ultimately, to assist the Directors in seekin g the administration order. Statement of prior professional relationship The Administrators carried out a review of KPMG LLP s prior professional relationships with the Group and identified the following engagements: Two tax advisory engagements in the UK for MF Global UK Limited in 2009 and 2011, with fees totalling less than US$58,000; Three tax advisory engagements in the United States of America with MF Global Inc in 2010 and 2011, with fees totalling less than US$170,000; Three tax and company secretarial engagements in Australia for MF Global Australia Limited, Brokerone PTY Limited and MF Global Holdings Limited, in 2010 with aggregate fees of less than US$5,000; An audit engagement of MF Global Sify Securities India Pvt. Limited, a 70.15% subsidiary of MF Global Overseas Limited, in 2009; total fees were less than US$126,000. The Administrators understand that they ceas ed to be auditors in Si mult aneousl y with th ei r appoint ment as Administrator s i t to the C ompany, Ri Rc h ar dh Hei s, Michae l Pink an d Richard dfl Fleming were also appointed as Special Administrators of MF Global UK Limited. Subsequently Richard Heis, Michael Pink and Richard Fleming were also appointe d as Administrators of MF Global Overseas limited and MF Global Finance Europ e Limited on 2 November The Administrators have fully considered the relevant guide to professional conduct and ethics as issued by the relevan t regulatory bodies and are satisfied that the existence of these prior relationships, given the nature, size and timing, does not create any conflict of interest or threat to independence in achieving the objectives of the administration. 8

10 Management of the Company Management of the Company since appointment

11 Management of the Company since appointment Position on appointment There were 727 employees working within the business when the Administrators were appointed. All employees were employed by MFG Services although they all worked exclusively in MFGUK s business. The Company historically recharges all employee costs to MFGUK. MFGUK s staffing requirements changed considerably on its insolvency. Objectives The Administrators main consideration on appointment was to communica te on a timely basis with all employees and redundancy and retention policies. keep them regularly update d on propose d To ensure that the number and skills of retained employees met the requirements for the special administratio n of MFGUK. To negotia te a managemen t fee with MFGUK in respect of the employee services provided to it. To liaise with all key creditors includin g the pensio n schemes and HMRC and ensure that all compliance requirements (e.g. Health & Safety) are met. Strategy The Administrators worked closely with MFGUK s Special Administrators to establish MFGUK s short and medium term staffing needs. The Administrators have maintained a regular and open dialogue with employee s following their appointment. This include d obtaining ng initial fundin g from MFGUK, allowing the Company to make a commitment to all employees that they would be paid until at least the end of November Employees were further advised that a retention bonus scheme would be introduced covering a significant number of employees including key employees. As the majority of MFGUK s positions were expected to have been be closed out by the end of November 2011, the Administrators announced that they expecte d a large number of redundancies to be at this time. Consultations s were held with the Company s and MFGUK s senior management as regards to which employees were required in both the short and long term including identification of employees not required beyond the end of November Following these consultations the Administrators were able to advise all employee s of their position on 11 November Following confirmation from the administrators of MFGUK of which employees they required both in the short and medium term and those they did not require beyond the end of November, we made 390 employees formally redundant on 30 November 2011, with a further six employees resigning in the period 31 October to 30 November. 37 employees transferred to the purchaser of MFGUK s metals business, which operated as a standalone division within MFGUK. 10

12 Management of the Company since appointment (cont.) Strategy (cont.) The Administrators have received excellent support from the Company s employees, all of whom have acted in a thoroughly professional manner since our appointment. Through the Company s head of compliance, the Administrators have ensured that they are continuing to meet the Company s compliance policy. A management agreement is being discussed with MFGUK in respect of services provide d by the Company. An applicatio n was made to Court and an order was obtaine d on 19 December 2011 for the appointmen t of Blair Carneg ie Nimmo as an additional Administrator. Blair Nimmo s role will be to primarily and independently act on behalf of MFG Services to deal with the negotiation n of the management agreement with the MFG UK administrators. Current position and ongoing strategy A detailed redundancy and retention plan has been established and is being regularly reviewed by the Special Administrators of MFGUK to requirements. An agreemen t will be negotiate d between MFG Services and MFGUK in respect of the provision of employe e services. The Administrators have reviewed the Company s tax compliance position and continue to liaise with HMRC in this regard. ensure it meets resour ce 11

13 Other matters

14 Other matters Statement of affairs The Directors statement of affairs was submi tted to the Administrators on 19 December The Administrators made an application to Court and have obtaine d an order allowing a redacted version of the statement of affairs to be filed at Companies House and attached to these Proposals. The order was requested to allow the Administrators to redact sensitive information in relation to the Company s employees. Accordingly this information has been withheld from these Proposals, with all other information attached as Appendix 3. Directors conduct The Administrators are required by The Insolvent Companies (Reports on Conduct of Directors) Rules 1996 to submit a report or a return to the Department t of Business and Innovation on the conduct of any person who has been a director or shadow director of the Company at any time in the three years immediately preceding their appointment. We would be gratefu l to receive any comments that creditors or any other party may wish to make in order to assist in our investigations into the Company s affairs and in our preparation of comments for submission to the Department of Business and Innovation. Such comments, if required, can be treated in the strictest confidence. Future reporting In accordance with Rule 2.47 of the Rules, we intend to provide creditors with our next report by 31 May

15 Purpose of administration

16 Purpose of administration Hierarchy of statutory objectives The Insolvency Act sets out a hierarchy of the objectiv es of the administration 1. Rescuing the Company as a going concern, or 2. Achieving a better result for the company s creditors as a whole than would be likely if the compan y were wound up, or 3. Realising property in order to make a distributio n to one or more secure d or preferentia l creditors. Purpose of the administration and proposal for achieving this objective The Administrators consider that the purpose of this administration is the second objective, as defined above, as when compared to a winding-up, the administratio n allowed for a greater opportunity to maximise realisations. As set out on the Directors statement of affairs, the Company s main assets are inter-company liabilities owed by the Group s UK entities which, if the Company were to have entered into liquidation and ceased to provide employee services to these entities, would be less likely to realise value. Further, all of the employee s employed by the Company work exclusively for MFGUK. Ending the administration The administratio n is still in its early stages and is likely to continue to provide its services to meet MFGUK s future requirements for some time, albeit probably on a reducin g activity level over time. This will require the Administrators to seek an extensio n of the administratio n order beyond its curren t expiry on 30 October 2012, as it would not be practicabl e to provide these services in liquidation. It is difficult to precisely determine the exit route from administration n at this stage. In due course the Administratorsrs strat rategy will be either to apply to court to distribute any available funds within the administratio n and exit via dissolution, or to exit via a Creditors Voluntary Liquidation. The decision will be based on which is the most appropriate and cost effective route in the circumstances at the relevant time. 15

17 Purpose of administration Creditors Secured creditors Accordin g to Companies House the Company has not granted any security over its assets. As there are no secured creditors the prescribed part provisions of Section 176A (where Administrators are required to reserve a fund from floating charge assets for unsecured creditors) do not apply. Net realisations, after costs, will be available for preferentia l and unsecured creditors. Preferential creditors There were no arrears of wages and all holiday pay will be paid as an expen se of the administratio n of MFGUK. Accordingly, the Company does not have any preferential creditors in respect of wage arrears or holiday pay. We therefore expect preferentia l creditors to be limited to unpaid pensio n contribution s for October Unsecured creditors In their Statement of Affairs, the Directors estimate that the Company has the following unsecured liabilities: Unsecured creditors 000 Total outstanding balance MF Global UK Pension Fund 18,414 Employee contractual claims 14,502 HM Revenue & Customs 6,134 Trade creditors 27 Total 39,077 Source: Director s Statement of Affairs. As well as being dependent on the Company s liabilities, the outcome of the administration for unsecured creditors is also dependen t upon the conclusion of the management fee discussions with MFGUK. These discussions remain ongoing and are not expected to be concluded until early in Once terms are agreed we would expect a management fee to be paid by MFGUK to MFG Services on a monthly or quarterly basis, determined by the level of the MFGUK payroll. We would therefor e not expect all the payments to be received until the MFGUK administration is being wound down, which could be some months and possibly years away. The Administrators are therefor e not presently able to estimate the timing or quantum of any return to unsecure d creditors. 16

18 Purpose of administration Creditors (cont.) Defined benefit pension scheme MF Global operates a defined benefit pension scheme (the MF Global UK Pensio n Fund) for aroun d 30 employees. MFG Services is the only participatin g employer in this scheme. A Section 120 notice has bee n submitted to the PPF by the Administrators to formally notify it of the Company s insolvency. As a result, the scheme has entere d a PPF assessment period and benefit accrual for active members has ceased. The Administrators expect the trustees of the scheme / PPF to submit a claim against MFG Services in the region of 20 to 25 million under Section 75 of the Pensions Act 1995 (a cessation debt due from an employer to the trustees of a defined benefit pensio n scheme, triggered here by the insolvency of the participatin g employer) in respect of the shortfall in the defined benefit scheme. A preliminary claim of 18 million has already been received reflecting the deficit calculated as at 31 May This will be update d for the period to 31 October Group personal pension scheme The Administrators understand that the majority of the Company s employees are eligible to be members of this defined contribution pension scheme which is operated by AEGON. Employer contributions to this scheme are continuing for retained employees. Other pension schemes Records held by the PPF and the Pensions Regulator indicate that there may be some further smaller pension schemes associated with the Company. We are currently investigating the backgroun d to these plans and our preliminary conclusions are that these plans are define d contribution in nature. 17

19 Purpose of administration Creditors meeting Creditors meeting As the Administrators anticipate that there will be funds available to the unsecure d creditors they propo se to hold a meeting of creditors in accordance with Paragraph 51 at 12:00 noon on 5 January 2012 at Brid ewell Hall, St Brid e Found ati on, Brid e Lane, Fleet Street, London EC4Y 8EQ. The sole purpose of the meeting is for creditors to consider the Administrators Proposals and decide whether to form a creditors committee, if desired, and vote on the resolutions below. As such, there will be no Company Directors present. Resolution 1: that the Administrators Proposals be approved; Resolution 2: that a creditors committee be formed; Please note a creditors committee mus t consist of between three and five creditors of the Company, and a corporate entity must elect a representative to act on the Committee, In addition, if a creditor wishes to resolve that a committee should be formed, then they need to state the name of the creditor they wish to nominat e to sit on the committee. If a committee is not formed then the following resolutions will be for the creditors to consider. Resoluti on 3: th a t the Admini istrators t be authorised to draw fees on account f rom th e assets of the Company from time to time duri ng the period o f the administration based on time properly spent at KPMG LLP charge out rates that reflect the complexity of the assignment. Also, that the Administrators be authorised to draw disbursements from time to time to include category two disbursements; Resolutio n 4: That the costs of KPMG LLP in respect of forensic, tax, VAT and pension advice and other relevant advice provided to the Administrators be base d upon time costs and shall be paid out of the assets of the Company; Reso lution 5: That the Administrator s be discharged from liability in respect of any action of theirs as Administrators pursuant to Paragraph 98(1), immediately following the registratio n of the appropriat e forms with the Registrar of Companies. Proxy forms are enclose d for your use. If you wish to vote at the meeting, please return your completed statement of claim which must be received by 12 noo n on 4 January 2012 in order to be counted. Any proxies that are intended to be used must be submitted to the Administrators by the date of the meeting. 18

20 Costs of administration

21 Costs of administration Administrators remuneration A detailed analysis of Administrators time and costs, together with charge out rates, for each grade of staff for the various areas of work carried out to 9 December 2011, is attached as Appendix 2. There have been no receipts or payments in the period. The statutory provisions relating to remuneration are set out in Rule Further information is given in the Association of Busine ss Recove ry Professionals publication A Creditors Guide to Administrators Fees, which can be foun d at the R3 website at However, if you are unable to access this guide and would like a copy please contact In accordance with Rule it is for the creditors committee if one is formed, to determine the basis on which the Administrators remuneratio n is to be fixed. However, if there is no committee the Administrators remuneration may be fixed by a resolutio n of a meeting of creditors, see page 18. Additionally a resolution will be sought allowing the Administrators to draw category 2 disbursements should they arise. These are costs that are directly referable to the appointment t in question but not to a payment to an independent third party. They may include shared or allocated costs s that can be allocated to the appointment on a proper and reasonable basis, for example, business mileage. A full explanation of these disbursements is set out in the Creditors Guide to Administrators Fees referred to above. In the period to 9 December 2011, we have incurred time costs of 291,071 representing 647 hours at an average hourly rate of 450. This also includes work undertaken in respect of tax, VAT, health and safety advice and other relevant advice provided to the Administrators from KPMG LLP in-house specialists. This report sets out the key areas where time costs have been incurred to date. 20

22 Proposals

23 Proposals In addition to the specific itemised proposals below, this document in its entirety constitutes the Administrators Proposals in accordance with Paragraph 49. The Administrators propose the following: To continue to do all such things reasonably expedient and generally exercis e all their powers as Administrators as they, in their discretion, consider desirable in order to maximise realisation s from the assets of the Company in accordan ce with the objective as set out on page 15. To investigate and, if appropriate, pursu e any claims the Company may have. To seek an extensio n to the administratio n period if deeme d necessary by the Administrators. To be permitted, if appropriate, to apply to the Court for the authority to make a distributio n to unsecure d creditors. In the event that the Administrators deem that liquidatio n is not appropria te because no dividend will become available to creditors, and there are no other outstandin g matters that require to be dealt with in a liquidation, then the Administrators shall file the appropriat e notices at Companies House and the Company will subsequently be dissolved. Alternatively if though t fit, the Administrators will move the company from administration into liquidation. If Creditors Voluntary Liquidation is deeme d appropriate we will appoint Blair Carnegie Nimmo, Richard Heis and Michael Robert Pink as Joint Liquidators of the Company without any further recourse to creditors. In accordance with Paragraph 83(7) and Rule 2.117(3), creditors may nominate a different person as the proposed Liquidator, provide d that the nominatio n is made after the receipt of the Proposals and before the Proposals are approved. Any act required or authorised under any enactment to be done by the Joint Liquidators may be don e by an y of them. If thought fit, the Administrators will petition the Court for a winding-up order placing the Company into Compulsory Liquidation, with Blair Carnegie Nimmo, Richard Heis and Michael Robert Pink seeking appointment as Joint Liquidators. To be discharged from liability in respect of any action of theirs as Administrators pursuant to Paragraph 98(1), immediately following the registratio n of the appropria te forms with the Registrar of Companies. That the Administrators be authorise d to draw fees on accoun t from the assets of the Company from time to time during the period of the administratio n base d on time prope rly spent at KPMG LLP charg e out rates that reflect the complexity of the assignment. Also, that the Administrators be authorised to draw disbursements from time to time to include category two disbursements. That the costs of KPMG LLP in respect of forensic, tax, VAT, pension, health and safety advice and other relevant advice provided to the Administrators from KPMG LLP i n-house specialists be based upon time costs and s hall b e paid out of th e assets of th e C ompany. 22

24 Appendix 1 Statutory information

25 Appendix 1 Statutory information Company name Company number Date of incorporation 1 May 2007 Registered office Previous address MF Global UK Services Limited 8 Salisbury Square, London, EC4Y 8BB 5 Churchill Place, Canary Wharf, E14 5HU Court High Court of Justice Court reference 9526 of 2011 EC regulation on insolvency proceedings The EC regulation applies and these proceedings are the main proceedings as defined in Article 3 of the EC Regulations Administrators i t Blair Carnegie Nimmo, Richard Heis, Michael Robert Pink and Richard Dixon Fleming Date of appointment 31 October 2011 Appointer Para 100(2) statement Directors Secretary Details of share holdings Directors In accordance with paragraph 100(2) all functions or acts to be carried out by the Administrators are to be exercised by all or any one or more of the persons for the time being holding that t office Aislinn Marion Shaw, Richard Warren Moore and Simon William Gardiner Vicki Kong The Company is a wholly owned subsidiary of MF Global Holdings Europe Limited, and is an indirectly, wholly owned subsidiary of MF Global Holdings Limited 24

26 Appendix 2 Administrators time and cost analysis Administrators time and cost analysis, including schedule of charge out rates

27 Appendix 2 Administrators time and cost analysis (from 31 October to 9 December 2011) MF Global UK Services Limited Summary activity it Partner/ Director Manager Administrator Total hours Time cost Average hourly rate Trading Asset realisation Health and safety Cashiering General (Cashiering) Reconciliations (and IPS accounting reviews) Employees Correspondence DTI redundancy payments service Pension funds Pensions reviews Tax Post appointment corporation tax Post appointment PAYE Trading Cash and profit projections and strategy Purchases and trading costs Administration and planning General Fees and WIP Statutory and compliance Appointment and related formalities Checklist and reviews Pre-appointment checks Strategy documents , , , , , , , , , , Note: Al l staff who have worked on thi s assignment, includin g cashier s and secretarial staff, have charged time directly to the assignment and are included in the analysis of time spent. The cost of staff employed in centra l administration function i s not charged directly to the assignment but i s reflected in the lev el of charge out rates. Source: Administrators records 26

28 Appendix 2 Administrators time and cost analysis (from 31 October to 9 December 2011) (cont.) MF Global UK Services Limited Summary activity Partner/ Director Manager Administrator Total hours Time cost Average hourly rate Creditors Creditors and claims General correspondence Notification of appointment Secured creditors Statutory reports General analysis Trading Communications - Other HR Investigation Directors Correspondence with directors Directors' questionnaire/checklist Statement of affairs Realisation of assets Open cover insurance , , , , Total in period , Note: All staff who have worked on this assignment, including cashiers and secretarial staff, have charged time directly to the assignment and are included in the analysis of time spent. The cost of staff employed in central administration function is not charged directly to the assignment but is reflected in the level of charge out rates. Source: Administrators records 27

29 Appendix 2 Summary of charge out rates in operation during the course of the administration Summary of charge out rates in operation during the course of the Administration 31 October 2011 to 9 December 2011 Restructuring, t Tax, Pensions and Forensics Partner 725 Director 635 Senior Manager 525 Manager 420 Senior Administrator/Assistant Manager/Consultant 305 Administrator 230 Support staff 120 Source: KPMG LLP records 28

30 Appendix 3 Directors statement of affairs

31

32

33

34

35

36 2011 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registere d trademarks or trademarks of KPMG International Cooperative (KPMG International).