By Joseph Checkler NEW YORK--A judge on Wednesday held off approving a deal between the trustee unwinding the brokerage of MF Global Holdings Ltd. (MFGLQ) and CME Group Inc. (CME) that calls for the futures exchange operator to turn over about $130 million in property that will go to former customers of the collapsed brokerage. Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan said he would take the matter "under submission," a common line used by the laborious judge throughout this and other cases. The latest version of the deal includes an agreement between the brokerage trustee, James W. Giddens, and Louis J. Freeh, the trustee in charge of MF Global's parent company. Essentially, Mr. Freeh wants the right down the road to fight the $130 million being allocated to customers. It's possible that Mr. Freeh will pursue claims against the brokerage as an individual customer, which typically gets paid ahead of other creditors in a brokerage liquidation. "We believe the likelihood that such a challenge ever occurs is remote," said Hughes Hubbard & Reed LLP's James B. Kobak Jr., a lawyer for Mr. Giddens. In all, CME would transfer $160 million and the proceeds from exchange memberships to Mr. Giddens. The $130 million will then be turned over to brokerage customers, to be split between U.S.-based and overseas accounts. The additional $30 million would go to Mr. Giddens and would be allocated later. James Koutoulas, a lawyer representing a group of MF Global's commodities customers, said in court that he hopes customers get the money as soon as possible. The judge didn't indicate why he'd wait to rule on the settlement, which has wide support among parties involved in the case. Most bankruptcy judges rule from the bench on such matters. Mr. Giddens is winding down MF Global 's broker-dealer business under the authority of the Securities Investor Protection Act, which governs the liquidation of failed brokerage firms. The liquidation is separate from the bankruptcy case of MF Global Holdings, the parent company, which filed for Chapter 11 protection last fall. That estate is now being overseen by Mr. Freeh, a former director of the Federal Bureau of Investigation. Mr. Giddens has recovered about $5.3 billion of the $5.5 billion to $6 billion in U.S. customers' segregated funds held at the brokerage and has returned more than $4 billion to customers via a series of bulk transfers arranged by CME in the weeks following MF Global's demise last year. Despite the return of that money, he still estimates a $1.6 billion shortfall in customer accounts, money that should have been matched dollar for dollar. In separate reports earlier this year, Mr. Giddens criticized the sovereign-debt investments that drove MF Global out of business and said he might pursue claims against the man who directed those bets, former Chief Executive Jon S. Corzine. Mr. Freeh's report said the parent might have about $2.3 billion in claims against the brokerage business. --Jacob Bunge in Chicago contributed to this article. Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com) Write to Joseph Checkler at joseph.checkler@dowjones.com. Follow him on Twitter at @JoeCheckler. Subscribe to WSJ: http://online.wsj.com?mod=djnwires
