The trustee liquidating MF Global Holdings Ltd's broker-dealer unit asked a federal bankruptcy judge to authorize the distribution of as much as $2.1 billion to about 36,000 former commodities customers, roughly doubling the total payout to $4.1 billion.

James Giddens, the trustee for MF Global Inc, said the increased payout should restore at least two-thirds of U.S.-based property to former customers of that unit, where funds were frozen because of the parent's October 31 bankruptcy. That's up from an earlier estimate of a 60 percent payout.

In a court filing, Giddens said the increased payout is as full and as prompt a distribution as circumstances and the law allow, and will leave him a sufficient reserve as he assesses customer claims.

The payout could provide further relief for customers whose money has been in limbo for one month. It requires approval by U.S. Bankruptcy Judge Martin Glenn in Manhattan, who has authorized two transfers this month. A hearing is set for December 9, court records show.

Once run by former New Jersey Governor Jon Corzine, MF Global filed for Chapter 11 protection after the New York-based company revealed a $6.3 billion bet on European sovereign debt. That worried investors, credit rating agencies and trading partners, and spurred a liquidity shortfall.

Federal investigators are still looking for missing customer funds estimated to total in the hundreds of millions of dollars. Giddens has estimated that the shortfall could total $1.2 billion.

Former FBI director Louis Freeh was asked on Friday to become the trustee for the MF Global parent company. He would also work to return money to creditors, and work with investigators looking for the missing funds.

Giddens said he is trying to return money on a pro rata basis, but some customers say they are coming up short.

Dean Tofteland, a Minnesota corn and soybean farmer, said he was encouraged that more money is being paid out. But he said it has been hard to prepare for the next harvest, with most of the $253,000 in his MF Global account still tied up.

As of today we only have about 15 percent of our assets back, he said. We need 100 percent back to get 100 percent confidence back.

The Commodity Customer Coalition, which has lobbied for the quick return of funds to more than 7,000 former MF Global customers, said it supported Giddens motion, and would continue to push for the return of all customer money.

Giddens said the $2.1 billion transfer could take two to four weeks, and because of its complexity would require help from CME Group Inc's Chicago Mercantile Exchange and other derivative clearing organizations.

The trustee's case is In re MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-2790. The MF Global bankruptcy is In Re MF Global Holdings Ltd, in the same court, No. 11-15059.

(Reporting by Tom Polansek in Chicago, and David Sheppard and Jonathan Stempel in New York; Editing by Gerald E. McCormick and Tim Dobbyn)