MF Global Holdings Can Hire Lawyers and Advisers, Judge Says
MF Global Holdings Ltd. (MFGLQ)’s bankruptcy judge granted the company permission to hire six lawyers and consultants in its bankruptcy, while asking for more information about a seventh, Freeh Group International Solutions LLC.
U.S. Bankruptcy Judge Martin Glenn said in Manhattan court today that he was concerned about duplicative work, and advised the main law firm for MF Global’s Chapter 11 trustee, Morrison & Foerster LP, to make sure it coordinated with all the other advisers.
“I have some concern about the proliferation of professionals in the case,” Glenn said.
Separately, he approved the hiring of two other firms for the parent company’s brokerage, which is liquidating in a separate proceeding; MF Global Inc. can hire Slaughter & May as English counsel, and Haynes & Boon LLP as special counsel, Glenn said.
Glenn approved MF Global Holdings’ requests to hire law firm Freeh Sporkin & Sullivan LLP and asked for more information about consultant Freeh Group International Solutions LLC. Both firms are affiliated with former FBI director Louis Freeh, who is serving as a Chapter 11 trustee for the bankrupt holding company.
“The issue is whether the trustee may retain a business with whom the trustee is affiliated other than as an attorney or an accountant,” Glenn said.
Separately, MF Global Holdings said it will file court papers in March to respond to an outcry from customers about its planned use of insurance proceeds. Customers have said $170 million in proceeds from an insurance policy should go to repay the $1.2 billion missing from their accounts, not to cover the defense costs of MF Global executives.
U.S. Specialty Insurance Co. also will seek permission at a March 6 hearing to lift the usual block in bankruptcy in order to advance defense costs to insured parties covered by its $25 million policy which covers directors and officers from May 2011 to May 2012, according to court papers filed today.
The parent, MF Global Holdings Ltd., once run by former New Jersey governor Jon Corzine, filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls and bank demands for money at its operating unit, MF Global Inc. The brokerage and the parent are in different bankruptcy proceedings handled by two trustees.
Glenn approved today the retention of FTI Consulting (FCN) as a financial adviser, Kasowitz, Benson, Torres & Freidman LLP as conflicts counsel, Morrison & Foerster LP as lead counsel for the Chapter 11 trustee, Pepper Hamilton LLP (1195L) as special counsel to the trustee and Skadden, Arps, Slate, Meagher & Flom LLP as bankruptcy counsel.
He also approved the hiring of Capstone Advisory Group LLC as a consultant for creditors.
The brokerage case is Securities Investor Protection Corp. v. MF Global (MFGLQ) 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).