MF Global $1 billion vanished into brokerage, court is told

Insufficient Funds

The case is “unique in that there is currently insufficient cash available in the debtors’ estates to compensate professionals, there is no guaranty there will ever be cash available to compensate professionals, and there is no clear timeline before it becomes apparent whether there will be cash to compensate professionals,” Dewey & LeBoeuf lawyers wrote.

The law firm agreed to the work at the outset of the case “knowing it will accrue fees and disbursements aggregating millions of dollars without knowing when and if it will be paid.”

Miller said money will come into the estate from the liquidation of securities positions and other assets, making it clearer how professionals will be paid.

Dewey, once the 11th-largest law firm, is collecting bills to pay lenders owed $200 million amid departures of lawyers and dismissals of nonunion workers.

Partners’ Departures

The firm has lost more than two-thirds of its 300 partners, according to the American Lawyer, a trade magazine.

Proskauer Rose LLP, which hired Dewey lawyers including Martin Bienenstock, a former bankruptcy partner and managing chairman, has proposed itself as new counsel to the MF Global Holdings creditors committee.

Separately, Glenn gave MF Global Holdings until June 18 to detail the assets and debts of its remaining unit.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Bloomberg News

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