(Updates with details of filing in second paragraph)
Dec. 19 (Bloomberg) -- MF Global Holdings Inc. used $2.4 million in cash collateral of its largest lender JPMorgan Chase & Co. for the month ended Nov. 30, the majority of it for payroll.
MF Global, the bankrupt parent of a failed broker-dealer, lost $2.36 million from Oct. 31, the day it filed for creditor protection, to Nov. 30, the Chapter 11 trustee, Louis Freeh, said in a filing today in U.S. Bankruptcy Court in Manhattan. Most of the money, $2.38 million, went to pay the remaining employees.
Freeh’s report is preliminary and may change, according to the filing. MF Global Inc., the brokerage unit, fired most of its workforce of 1,066 in early November, saying it would rehire some to help wind down the company.
The operating report for MF Global Holdings also covered a separate unit, MF Global Finance USA, and showed the company brought in $402,990.51 from reimbursements for some services and made an intercompany transfer of $401,990.90.
U.S. Bankruptcy Judge Martin Glenn said on Dec. 14 that the company could use New York-based JPMorgan’s cash collateral as it winds down in bankruptcy, overruling objections from customers who said the money could be part of the $1.2 billion missing from their segregated brokerage accounts.
JPMorgan, agent to a $1.2 billion loan, agreed at the outset of MF Global’s bankruptcy to let it use $26 million subject to an agreement that gives the bank a lien on all MF Global assets. Freeh said in court papers that the money is presumed to belong to the company, not customers.
MF Global Holdings, once run by former 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. Its bankruptcy filing listed assets of $41 billion and debt of $39.7 billion. Corzine, also a former U.S. senator and New Jersey governor, quit as chief executive officer on Nov. 4.
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: Andrew Dunn, Mary Romano
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