MF Trustee Says He will Work With Customers Suing Corzine
The trustee liquidating MF Global Inc. said he planned to work with customers in a lawsuit against Jon Corzine and other former brokerage executives, helping to prosecute claims and eventually distributing any money they recovered to claimants.
Trustee James Giddens struck a “cooperation agreement” with lawyers for the plaintiffs, whom he will help assert “all possible claims and legal theories for recovery,” he said. Working with them on a suit in progress in federal court in Manhattan, he won’t have to duplicate their efforts, he said today in a statement.
Under the plan, Giddens will assign to the plaintiffs his “potentially viable” claims against Corzine and other officers and directors of the MF Global holding company being sued. U.S. District Judge Victor Marrero has been combining the cases, saying they make similar claims about Corzine and other company officials.
In a court filing today, the trustee said his own investigation shows that in the company’s final week of operations, certain officers, directors and employees used segregated customer funds to pay the parent’s debts. They did so “with conscious disregard, recklessness, or negligence in violation of statutory and common law including breach of their fiduciary duties,” he said.
The agreement needs a U.S. bankruptcy judge’s approval in Manhattan, he said.
Parent company MF Global Holdings Ltd. (MFGLQ) filed the eighth- largest U.S. bankruptcy on Oct. 31 with debt of almost $40 billion after making $6.3 billion in bets on sovereign debt and getting margin calls. The brokerage is being separately liquidated to pay customers facing a $1.6 billion shortfall.
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).
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