Trustee Freeh leaving as MF Global winds down
Jun. 05, 2013
NEW YORK (AP) — Louis Freeh, the trustee charged with getting MF Global creditors their money back, has stepped down as the company's long bankruptcy nears an end.
The former FBI director announced late Tuesday that he would hand over trustee responsibilities to a three-person board to finish winding down the financial firm. MF Global Holdings Ltd.'s bankruptcy plan, which lays out how money will be returned to creditors and was approved by a judge in April, also took effect Tuesday.
The new board is composed of Daniel Ehrmann of Alvarez & Marsal, Rich Katz of Torque Point Advisors and Nader Tavakoli of investment firm EagleRock Capital Management. Ehrmann is a turnaround specialist who has also worked on winding down Lehman Brothers. Katz previously ran a desk at Goldman Sachs that invested in companies going through bankruptcy, lawsuits or shareholder disputes.
MF Global Holdings imploded in October 2011, after making big bets on bonds issued by European countries that later turned sour. With $41 billion in assets, it was the eighth-largest corporate bankruptcy in U.S. history.
Freeh, as bankruptcy trustee, has been trying to recover as much money as possible for creditors. So far, Freeh has overseen the "eventual" return of more than $1 billion to creditors of MF Global Holdings, though a news release Tuesday didn't say how much creditors have already received.
Freeh also sued ex-CEO Jon Corzine and other top executives, blaming them for the company's collapse, though Corzine's representatives have vehemently denied the accusation. Corzine, who had been co-chairman of Goldman Sachs as well as a former Democratic U.S. senator and governor of New Jersey, stepped down as MF Global CEO in November 2011. MF Global shareholders and customers have also filed complaints against Corzine.
Another trustee, James Giddens, is overseeing the liquidation and recovery of lost money at MF Global Inc., the broker-dealer arm of the company that farmers, ranchers and business owners used to hedge their risks against fluctuating crop prices.
When MF Global collapsed, more than $1 billion in customer money was discovered to be missing.
Giddens was locked in a dispute with JPMorgan Chase, which had held MF Global funds in several accounts and also processed the firm's securities trades. Giddens and JPMorgan had reached an agreement where JPMorgan would return money that MF Global Inc. had transferred to it. Judges in New York will consider whether to approve that settlement on July 3.
No one has been charged in the MF Global case. Federal regulators, Congress and a federal grand jury in Chicago have investigated MF Global's failure and the disappearance of customers' money.