MF Global Holdings trustee urges creditors' priority

January 10th, 2012

Reuters
Jan. 10, 2012

In a filing late Monday with the bankruptcy court in Manhattan, trustee Louis Freeh said the holding company has “substantial intercompany claims” against the brokerage unit MF Global Inc, stemming from intercompany loans it made to that unit.

Freeh said such loans are not customer assets, and that any recoveries tied to such loans belong to creditors of the parent company, and should not be diverted to customers of the brokerage unit.

He said he is concerned an “inappropriate interpretation” of relevant statutes could prompt James Giddens, the trustee overseeing the broker-dealer unit, to deny creditors a right to recover from property that was never deposited by customers.

Giddens and regulators are trying to account for hundreds of millions of dollars missing from MF Global Inc accounts, a shortfall that has been estimated at $1.2 billion.

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