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MF Global files for Ch. 11

by Lou Whiteman  |  Published October 31, 2011 at 11:37 AM
MF_Global_files_for_Ch. 11_227.jpgMF Global Holdings Ltd. filed for Chapter 11 protection Monday, Oct. 31, after a weekend-long scramble by the troubled brokerage to find a rescue deal and after it was suspended by regulators from conducting new business.

New York-based MF Global, run by former Goldman, Sachs & Co. CEO and New Jersey Gov. Jon Corzine, sought protection at the U.S. Bankruptcy Court for the Southern District of New York in Manhattan.

The company earlier Monday had its status as a primary dealer suspended by the New York Federal Reserve, and its shares were halted in anticipation of expected news.

J.P. Morgan Chase & Co. and Deutsche Bank AG were listed in the filing as the largest unsecured creditors to MF Global.

Reports early Monday had said MF Global was expected to file for bankruptcy with a deal in place to sell its futures brokerage business and other assets via a bankruptcy auction for upward of $1 billion, with Interactive Brokers Group LLC listed as the likely buyer. However, no deal was mentioned in the initial bankruptcy filing.

MF Global has been battered by bets it placed on euro-zone economies. The company last week posted a surprise quarterly loss and disclosed $6.3 billion in sovereign debt exposure in Europe, prompting cuts in its credit ratings to junk status and a drop in its share price.

The company in recent weeks is said to have tapped the entirety of $1.3 billion in credit lines from banks.

MF Global has reportedly been in talks with a number of potential bidders, including Interactive, Goldman, Macquarie Group Ltd. and Barclays plc, as well as private equity firm J.C. Flowers & Co. LLC, a MF Global shareholder.

The New York Federal Reserve in a statement said that the suspension "will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities" set out in the regulator's policies.

MF Global is reportedly working with Evercore Partners Inc., Skadden, Arps, Slate, Meagher & Flom LLP, Sullivan & Cromwell LLP and Weil, Gotshal & Manges LLP, among other advisers.
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Tags: bankruptcy | Deutsche Bank AG | Goldman Sachs & Co. | J.P. Morgan Chase & Co. | Jon Corzine | MF Global Holdings Ltd. | New York Federal Reserve | U.S. Bankruptcy Court for the Southern District of New York in Manhattan

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