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MF Global Holdings claimants object to debtors' use of cash collateral
By Jim Witters
Wilmington, Del., Dec. 5 - A group of claimants of MF Global Holdings Ltd. objects to the debtors' use of cash collateral, according to documents filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.
The group of commodities traders with accounts at MF Global, Inc. specifically objects to a lien being placed on money they believe belongs in their segregated accounts and not included in the estate's assets, the documents state.
The group is seeking carefully drawn carve-out provisions in the cash collateral order to make it clear that co-mingled funds are not the property of the debtor and the liquidity facility lenders can acquire no lien on those funds.
A hearing on granting use of the cash collateral on a permanent basis is scheduled for Dec. 9.
Traders' claims
The U.S. Securities Investor Protection Act of 1970 trustee stated in open court that millions, possibly more than $1 billion, of commodities customers' funds appear to be missing, the documents state.
"Moreover, funds appear to have been moved, either inadvertently, erroneously and without authorization, or with improper intent, out of customers' segregated accounts into other accounts," the documents state.
"As the commodities customers' segregated accounts are property held in trust on the customers' behalf, those funds are not the property of MF Global's estate and the liquidity facility lenders should not be granted a lien on any of those funds," the documents state.
The claimants are C. Richard Stark, Steven M. Abraham, Steven M. Abraham Revocable Trust, Transcend Investments LLC, Carl E. Berg, Daniel Stern, January Stern, Jeffrey Stern, Kenneth Stern, Lee B. Stern, Philip B. Sauer, Murray R. Wise, K&W Partners LLC and Mercantile Partners LLC.
MF Global, a commodity and derivatives broker based in New York, filed for bankruptcy on Oct. 31. Its Chapter 11 case number is 11-15059.
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