Peregrine ruling may lead to full payment for some customers

March 20, 2013 10:19 AM

Peregrine Financial Group Inc.’s Chapter 7 trustee won court approval to create three classes of firm commodity customers, a ruling that he said may lead to full repayment for one class of account holders.

U.S. Bankruptcy Judge Carol A. Doyle in Chicago today approved trustee Ira Bodenstein’s request to divide account holders based on who traded on U.S. commodity exchanges, who traded on exchanges outside the country, and who holds warehouse receipts for taking or making delivery under commodity contracts.

That division may enable customers who traded on foreign commodities exchanges to be repaid in full, Bodenstein said after the hearing.

“We anticipate that they’ll get close to all their money,” Bodenstein said. There may even be a surplus, he said.

Peregrine, a Cedar Falls, Iowa-based commodities firm with offices in Chicago, filed to liquidate in July after the National Futures Association said more than $200 million in customer funds were missing.

Firm founder Russell Wasendorf Sr., who is now serving a 50-year federal prison sentence for fraud and embezzlement, stole mostly from customers who traded on U.S. exchanges, the trustee said.

Doyle in September approved Bodenstein’s request to make a $123 million interim payout to account holders.

The case is In re Peregrine Financial Group Inc., 12- bk-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).

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