hurricanemaxi
Joined: 04 Nov 2011
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 Posted: Wed Nov 16, 2011 11:09 pm Post subject: MF ‘Optimistic’ of Stakeholder Consensus |
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MF Global Holdings Ltd. (MF) is optimistic about the company’s stakeholders reaching consensus even as the parent company faces hurdles in collecting information from its operating subsidiaries, a lawyer for the company said in Manhattan bankruptcy court.
The lawyer, Kenneth Ziman, said today that as the brokerage units have begun to wind down, as MF Global Inc. has under the trustee appointed by the Securities Investor Protection Corp., there have been fences created between the debtors.
“Sometimes these are like chain-link fences and information can pass through,” Ziman said. “At other times these fences are more akin to brick walls.”
MF Global filed its bankruptcy, the eighth-largest in U.S. history, on Oct. 31 amid credit-rating downgrades tied to the company’s $6.3 billion investment in European sovereign debt. About $593 million, or 11 percent, of customer funds at the brokerage unit are unaccounted for, according to a person with knowledge of the regulatory probes into the firm’s collapse.
At a hearing today, Ziman told U.S. Bankruptcy judge Martin Glenn that he didn’t believe there was a shortfall in collateral at foreign affiliates. He declined to comment further, saying the company was working with regulators on the shortfall issue.
MF Global is still marketing assets in Asia, Ziman said.
Collateral Used
The company has only used $2 million in cash collateral, out of the $8 million it was granted permission to use by JPMorgan Chase & Co. (JPM) at the outset of its Chapter 11 case, Ziman said. Glenn said MF Global can use JPMorgan’s cash until Nov. 30.
He said the company has had income since its bankruptcy from “shared services” and that there are potentially other sources of income, from the unwinding of trades where there is excess margin posted in unregulated businesses, or from tax refunds.
A lawyer for the creditors’ committee, Martin Bienenstock, also said there is money to be recovered for creditors.
“We think there is potentially quite an estate to be amassed here for creditors, but can give no assurances” Bienenstock said, noting that the company had traded its riskier investments such as foreign sovereign debt and derivatives for more stable, domestic assets over the summer, and the company had marked its investments to market fairly recently.
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