MF Global ends bankruptcy as trustee Freeh steps down

Tue Jun 4, 2013 10:08pm EDT
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By Nick Brown

NEW YORK (Reuters) - Collapsed brokerage MF Global Holdings Ltd on Tuesday effectively ended its bankruptcy, saying court-appointed trustee Louis Freeh will step down and hand the estate's remaining wind-down duties to a new three-member board.

The commodities broker, led by former New Jersey Gov. Jon Corzine, went into court-protected bankruptcy in 2011 after investors were spooked by its exposure to $6.3 billion in European sovereign debt.

The company's liquidation plan put together by Freeh, a former FBI director, and MF Global's creditors, was approved by bankruptcy Judge Martin Glenn in April, and the plan went into effect on Tuesday.

"With the plan approved and a new board in place, I am confident the liquidation process can be effectively administered to the satisfaction of the creditors," Freeh said in a statement.

The plan could not go into effect until certain conditions were met or waived, one of which was that the estate had enough cash to pay its claims, according to court papers filed in February.

A new board, consisting of Daniel Ehrmann, Nader Tavakoli and Richard Katz, will finish liquidating MF Global's assets.

The bankruptcy became a political firestorm when investigators found that MF Global had misappropriated money in customers' trading accounts. Corzine and his management team have not faced criminal charges, but face civil allegations of breaching a fiduciary duty. Corzine has denied wrongdoing.

A separate trustee, James Giddens, was tapped to wind down MF Global's broker-dealer estate and return as much money as possible to customers. They are expected to receive full payouts.   Continued...

Former FBI director Louis Freeh (R) takes questions regarding his report on child abuse allegations against former Penn State assistant coach Jerry Sandusky during a news conference in Philadelphia, Pennsylvania July 12, 2012. REUTERS/Tim Shaffer