Pinsent Masons advises on £52M funding deal for MF Global UK Pension Fund

The buyout transaction was completed simultaneously with the successful conclusion of settlement negotiations with KPMG as Special Administrators of MF Global UK Limited and covers £52 million of liabilities.

MF Global entered special administration in the UK in October 2011 following the worldwide collapse of the MF Global group, including Chapter 11 proceedings in the US.

The Fund entered a PPF assessment period and was significantly underfunded on a buyout basis. The Trustees entered into discussions with the Special Administrators regarding an early settlement of their claim against the Group that would allow the Trustees to secure, through insurance, benefits for the Fund's members that in broad terms were equivalent in value to those that had been promised before MF Global went into special administration. The buyout transaction was completed on 15th October and the Fund will now fully exit its PPF assessment period in due course having received full co-operation from the PPF.

Chris Martin, Managing Director of Independent Trustee Services Limited (the professional trustee to the Fund), said "I am delighted that we have been able to help deliver such a successful outcome for all members. This has only been possible as a result of the open and constructive dialogue with the Administrators, the creative approach of our advisers and PIC, and the tireless efforts of the whole Trustee board."

Robert Leftwich, Chairman of Trustees, added: "The innovative insurance solution developed by the Trustees and their advisers, working closely with the PIC team, has enabled an early settlement, ending a period of uncertainty regarding the insolvency recovery and securing an outcome for members that is far better than we could have hoped for when we started out on this journey."

Uzma Nazir, actuary at Pension Insurance Corporation, said: "We are proud to have been able to help the Trustees secure their members' benefits for the long-term after what must have been a period of uncertainty and concern for members. Once again for a pension fund in the PPF's assessment period we are delighted to have been able to work with the Trustees to provide a greater level of benefits than might otherwise have been available."

The Trustees were advised by LCP and Pinsent Masons.

Iona Whitaker of Pinsent Masons said: "By necessity, this was an extremely fast moving and complex transaction and called for real teamwork between the Trustees and their advisers. It was a pleasure to work with the Trustees who have been focussed on delivering the best outcome for members from day one."

Aaron Punwani of LCP said: "The Trustees were keen that as much as possible of the settlement amount went towards giving value to members rather than supporting insurance capital reserves. The creative structure used for the transaction, together with competitive pricing, meant that the Trustees were able to secure benefits that overall are broadly equivalent to the benefit promises that were in place before administration, but better value for money in the insurance market."

Richard Heis of KPMG said: "Owing to the hard work by ITS and its fellow trustees, the KPMG Administrators with assistance from their legal advisers Weil Gotshal were able to enter into a settlement which provided the Trustees with sufficient funds to buy an insurance policy to protect all members' interests. Using modelled returns between the different MFG companies we ensured that the deal is win-win for MFG and the members. This is the second time we have achieved this exceptional outcome on a large case, the first being Dunfermline Building Society."