(Updates with excerpt from filing in third paragraph.)
Dec. 12 (Bloomberg) -- MF Global Holdings Ltd.’s $25.3 million in cash held at JPMorgan Chase & Co. is presumed to be its own, the bankrupt company’s Chapter 11 trustee said in response to customer objections to its bid to use the money.
MF Global Holdings should be allowed to use the cash collateral of JPMorgan, trustee Louis J. Freeh said in papers filed today in U.S. Bankruptcy Court in Manhattan. Customers of the company’s failed brokerage, MF Global Inc., had asserted that the money may have been part of the $1.2 billion believed to be missing from their segregated accounts.
“The customers have failed to provide this court with any actual evidence in support of their position,” Freeh said in court papers. MF Global Holdings owns the New York-based bank account with JPMorgan, and under New York law, it is presumed that funds deposited in an account belong to the account holder, the trustee said.
MF Global Holdings, once run by former New Jersey Governor and Goldman Sachs Group Inc. co-chairman Jon Corzine, filed the eighth-largest U.S. bankruptcy after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations. About $1.2 billion may be missing from segregated customer accounts, according to James Giddens, the trustee liquidating the MF Global brokerage.
The company has been in talks with JPMorgan, its largest lender, on the use of cash collateral to pay the costs of its bankruptcy, a lawyer for Freeh said last week. U.S. Bankruptcy Judge Martin Glenn said Dec. 9 that he would reconsider the use of cash at a hearing Dec. 14 after customers objected.
JPMorgan, agent to a $1.2 billion loan, agreed at the outset of MF Global Holdings’ bankruptcy to let it use $26 million, subject to an agreement that gives the bank a lien on all of the company’s assets.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--Editors: John Pickering, Stephen Farr
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