My question relates to Restricted Stock Units (RSUs) issued by a company that subsequently goes into bankruptcy. In this case, I am referring to MF Global. I am a former UK employee (of MF Global UK Limited) and had a significant amount of RSUs that had not vested at the time of bankruptcy. To give some background, I had a percentage of my bonus payments set aside in my payslip to buy units on future vesting dates. Upon bankruptcy I understand that vesting is accelerated to the bankruptcy date so although I have little or no tax liability on the monies set aside, as the RSUs were issues pre-tax, the contributions made in my payslips have effectively be used purchased virtually worthless stock. I was wondering if there was any recourse at all to the bankruptcy estate to claim back the amounts originally set aside in my pay slip to buy units especially considering the negligable value as compared to the original contribution? Please bear in mind that RSU scheme was administered by the US holding company, MF Global Holdings Limited.
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Thanks for your question. Can you provide a bit more information? First who issued the restricted stock units ? The uk company or a US holding co? What actually happened to the money deducted from your bonuses? Was it paid into a trust or are you saying that your bonus was reduced and the RSU's issued instead? what has happened to the issuer of th RSU's ? Has it ceased trading and is it being liquidated or does it remain in a bankruptcy process? Part of MF Global I know went into Chapter 11. Senior Partner41103.4013120023
The RSUs were issued by the US holding company, MF Global Holdings Ltd. To be honest I'm not actually sure what happened to the physical money that was deducted from my bonuses. I do know that these amounts were effectively fx'd at the time of the award though to purchase a notional number of RSUs. I received a statement of unvested RSUs (vesting over 3 years) which was administered by Fidelity. Ultimately the bonus monies set aside would have been used to purchase shares on vesting dates, I'm not sure where the monies were accounted for pre-vesting. MF Global Holdings Ltd remains in the Chapter 11 bankruptcy process in the US and in the UK, MF Global UK Services Limited (who paid me) is in the same situation under the new Special Adminstration Regime set up after Lehman.
Ok thanks. I think you need to try and find out exactly what the structure was and what happened to the funds. This type of stock unit is peculiar to a US company but is a common way of locking bonuses in as part of a LTIP or golden handcuff but if the cash was not actually deducted and paid to a trustee but rather you were granted the RSU as part of your remuneration package then all you have is the stock unit which may be vested in an accelerated way. I am not a US lawyer but my understanding is that in US terms vesting simply means that you can sell the stock units . It is not like an option which until vested cannot be exercised. An unvested option lapses but in th erase of an RSU I think you will probably have the stock rights . They are an equity interest so they are only worth anything on the same basis as shares. I would expect you can retain them and if the company comes out of Chapter 11 then you may have some residual interest. The only way you are likely to see any cash back is if the amount attributed to the RSUs was actually paid to a trustee to purchase stock units in the future much as some employee share ownership plans or SAYE plans work . In those cases the cash sits in trust until the option to purchase stock is exercised and if the right is not exercised then the cash can be returned. Really you need to get a copy of all the relevant documentation and have a lawyer review it all - or at least get some clarity form the company about how the scheme is structured. The botXXXXX XXXXXne I am afraid is that in most cases ( including lehman incidentally) bonuses paid in stock or deferred stock become worthless if the company goes bust.
30 years in commercial law
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