It’s been a long two years for MF Global, a brokerage firm mired in the throes of bankruptcy proceedings, and it looks like the drama will be drawn out even further now that U.S. Bankruptcy Judge Marin Glenn has ordered the company to resolve issues with insurers.
MF Global went under in October, 2011, and since then, the narrative has only gotten worse. Shortly after the filing, the FBI launched an investigation to determine if more than $700 million in customer funds had gone missing. In November of 2012, a group of MF Global customers added PricewaterhouseCoopers to the lawsuit as a defendant. And in April of this year, Louis K. Freeh, the trustee for the firm, filed a lawsuit against the MF Global’s former CEO, Jon Corzine.
The latest development in the ongoing story involves Judge Glenn’s decision that the company cannot get approval for its settlement with the U.S. Commodity Futures Trading Commission until it can be determined if an admission of wrongdoing will result in denial of insurance coverage for the company’s directors and officers.
This will add a new dimension of frustration to customers of MF Global who are waiting to receive their checks. The existing settlement requires the brokerage firm to repay customers in full, and then pay a $100 million penalty if there are remaining funds. Additionally, the firm’s trustees must admit to “the allegations pertaining to liability against MFGI based on the acts and omissions of its employees,” according to court papers.
Meanwhile, attorneys for MF Global stated that the company will receive more than $300 million from a resolution with its U.K. unit.