By Dow Jones Business News, November 01, 2013, 02:54:00 PM EDT
By Joseph Checkler
MF Global Holdings Ltd. and the trustee unwinding its brokerage are going after more than $3 million in severance
payments made to MF Global's former head of fixed income right before the company imploded two years ago.
In a Thursday lawsuit filed with U.S. Bankruptcy Court in Manhattan, the administrator for MF Global and the trustee,
James W. Giddens, said they want Peter McCarthy to pay back the severance payments made on Sept. 30, 2011, and Oct. 14,
2011. MF Global filed for bankruptcy Oct. 31 of that year.
"The Defendant has benefited in the amount of millions of dollars at the expense of the Plaintiffs, and the Defendant
has knowledge thereof," lawyers said in the complaint. The lawyers, add, "Equity and good conscience demand the return
of these assets to the Plaintiffs, or an award of damages equivalent to the value of such assets."
Mr. McCarthy, who left the company before its collapse, couldn't immediately be reached for comment.
The Bankruptcy Code allows estates to claw back money it paid out in the months--or in some cases, years--before its
Chapter 11 filing. In the case of Mr. McCarthy's severance payments, MF Global and Mr. Giddens said they can go after
the money because it was paid within 90 days of MF Global's bankruptcy, and within one year of the bankruptcy filing of
MF Global Holdings USA Ltd., another company subsidiary.
Individual customers of MF Global's brokerage, which is being managed by Mr. Giddens, have already recovered most of
the funds that were caught up in the firm's collapse but both he and the administrator unwinding MF Global's estate
continue to search for more. Next week, Mr. Giddens will ask a judge if he can pay out the rest of the customer money.
For creditors of the brokerage's parent company, a judge approved a proposal earlier this year that would pay holders
of about $1 billion in MF Global's unsecured bonds between 12 cents and 42 cents on the dollar for their claims, with
claims stemming from a $1.2 billion revolving loan recovering between 27% and 80%.
Still, Jon S. Corzine, the former Goldman Sachs Group Inc. ( GS ) chairman and New Jersey governor who led MF Global, is
facing multiple lawsuits over the implosion, including ones from former customers, the litigation trust representing MF
Global and the Commodity Futures Trading Commission. Mr. Corzine and other accused executives have denied any
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to
Write to Joseph Checkler at email@example.com
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