MF Global bankruptcy exit plan primed for court hearing NEW YORK (Reuters) - MF Global Holdings (MFGLQ.PK) on Friday will seek court approval of a plan to liquidate its assets and repay creditors, signaling the final stages of its large and politically-charged bankruptcy. The collapsed brokerage would repay the bulk of lender JPMorgan Chase & Co's (JPM.N) claim, and would pay unsecured creditors as much as 34 cents on the dollar under a plan slated to go before Judge Martin Glenn in the U.S. Bankruptcy Court in Manhattan. MF Global, led by former New Jersey Gov. Jon Corzine, filed for Chapter 11 in October 2011 after investors were spooked by its $6.3 billion exposure to European sovereign debt. It became a political firestorm when regulators discovered billions of dollars were missing from the accounts of MF's commodity trader customers. Corzine and other MF Global officials were ordered to appear in multiple Congressional hearings, and the FBI, Securities & Exchange Commission and at least one Congressional committee launched investigations. The brokerage was found to have misappropriated customer cash to try to plug liquidity gaps as it faltered. While no criminal charges have been filed against Corzine, regulators say his negligent conduct contributed to the firm's demise. In a report issued on Thursday, Louis Freeh, the former FBI director and trustee in charge of liquidating MF's estate, blamed "the risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company's inadequate systems. The report came several months after a similar account from James Giddens, the trustee working to recover money for the broker-dealer's trader customers, which concluded that Corzine mismanaged the firm's growth. Corzine is facing civil lawsuits from Giddens and former customers. The plan going before Judge Glenn on Friday lays out how MF Global will pay back corporate creditors like lenders and bondholders. JPMorgan, agent on a $1.2 billion revolving credit facility, is a key player. Freeh has said that trader customers, while not technically creditors of the bankruptcy estate, will recover all their money. The plan was initially proposed by some of MF's largest unsecured creditors, led by hedge funds Silver Point Capital, Knighthead Capital and Cyrus Capital Partners. Freeh cooperated with the hedge funds on later drafts of the plan. While the plan is expected to be approved, it does face three objections, and Friday's hearing is a chance for the objectors to have their day in court. The Department of Justice, through its bankruptcy watchdog arm, the U.S. Trustee Program, said the plan impermissibly provides for the payment of legal fees for the creditors who first proposed it, and the release of certain third parties from legal claims. Preet Bharara, U.S. Attorney for the Southern District of New York, echoed the Trustee in balking at the releases. Sapere Wealth Management, a customer of MF Global's brokerage, has also filed an objection. Perhaps the biggest hurdle to approving the plan was resolved last month, when Freeh and JPMorgan cleared up a dispute over the value of intercompany claims within the bankrupt brokerage's estate. Under the deal, MF's parent entity will subordinate $275 million of its $1.887 billion claim against MF Global's finance unit below JPMorgan's $1.2 billion claim against the estate. The effect of the settlement is essentially to enhance JPMorgan's potential recovery to 76 cents for every dollar of claims, from 73 percent in an earlier version of the plan. But the settlement means less payout for unsecured creditors of MF Global's finance unit, who will see their maximum recovery dip to 34.4 cents on the dollar from 39 cents previously. Unsecured creditors of MF's parent entity have a maximum projected recovery of roughly 34 percent of claims. The case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No.