Peregrine trustee to distribute $123 million to commodity customers

By Caroline Salls

Pittsburgh, Sept. 6 - Peregrine Financial Group, Inc.'s Chapter 7 trustee requested court approval to distribute up to $123 million of segregated cash to commodity customers, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

Chapter 7 trustee Ira Bodenstein said he currently has $181 million on hand attributable to futures customers in different account classes.

The trustee said he is seeking court approval to transfer up to $123 million of that amount as an interim distribution.

Bodenstein said he plans to hold back more than $58 million of the available amount to ensure that adequare funds remain to account for any variations in claim amounts that may result from the claims allowance process and to assess the potential consequences of unauthorized or inappropriate historical cash movements between the accounts.

The interim distributions would be made through other futures commission merchants (FCMs) by way of bulk transfers of cash or through checks or wire transfer distributions directly to some of the commodity customers.

Customer details

The trustee said Peregrine's customers include customers with accounts opened to trade futures or options on futures on a U.S. futures exchange under section 4d of the Commodity Exchange Act and foreign futures customers with accounts opened to trade futures or options on an exchange located outside of the United States under CFTC Rule 30.7.

Although there is no indication that Peregrine's customers include those with delivery accounts, Bodenstein said any delivery customers would be included in the interim distributions.

Under the interim distribution, the trustee will transfer 30% of 4d and delivery customers' account balances and 40% of 30.7 customers' account balances.

The trustee said he proposed a higher interim distribution percentage for the 30.7 customers because more secured amount funds are available in those customers' accounts.

Two-step distribution

According to the motion, the distributions will be made in two steps.

Bodenstein said he would make initial interim distributions by Sept. 28 to all futures customer accounts with balances of $50,000 or less. The trustee said he believes that about 12,600 futures customers fall within this group.

Under the second step, interim distributions will be made to all futures customers with balances in excess of $50,000, all futures customers accounts with free credit balances of between $25,000 and $50,000 that had no trading activity within 90 days of Peregrine's bankruptcy filing and all accounts related to the free balance accounts.

The trustee said the second part of the interim distribution would be made no later than Oct. 15.

A hearing is scheduled for Sept. 12.

Peregrine is a Chicago-based futures broker. The company filed for bankruptcy on July 10. The Chapter 7 case number is 12-27488.

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