Bloomberg News

MF Global Creditors to Discuss Rights in Brokerage Case

January 04, 2012

(Updates with details of agreement in first paragraph.)

Jan. 4 (Bloomberg) -- MF Global Holdings Ltd.’s creditors will discuss their right to be heard in the liquidation of the brokerage unit, MF Global Inc., under a schedule agreed upon with the trustee of MF Global Inc.

A committee of creditors in the case will file arguments about their rights in the separate but related brokerage wind- down of MF Global Inc. on or before Jan. 18, according to court papers filed today. Under an agreement with James Giddens, a trustee overseeing the former operating unit under the Securities Investor Protection Act, Giddens will file a reply on or before Feb. 17.

The papers concern the “right of the committee to appear and be heard in the SIPA liquidation of MF Global Inc.,” lawyers for the creditors and the trustee wrote.

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.

While it filed for Chapter 11 bankruptcy to apportion returns to creditors, including bondholders and lenders such as JPMorgan Chase & Co., Giddens, appointed under the Securities Investor Protection Act, is overseeing distributions to customers missing an estimated $1.2 billion from their segregated accounts.

The Commodity Futures Trading Commission has said in a letter filed with the bankruptcy court that creditors can’t put their private interests ahead of customers. A lawyer for the agency wrote that creditors of the brokerage’s bankrupt parent company have used an “erroneous interpretation of the law” that would privilege creditors over customers of the failed operating unit.

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

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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