MF Global seeking Bankruptcy Protection

MF Global

MF Global

Broker-dealer MF Global Holdings (MF), the securities firm run by former New Jersey governor and Goldman Sachs head Jon Corzine, is seeking bankruptcy protection one week after reporting its biggest-ever quarterly loss.

MF Global filed its petition with the U.S. Bankruptcy Court for the Southern District of New York. Including its subsidiaries, MF Global declared assets of $41.05 billion and liabilities of $39.68 billion, according to its bankruptcy petition.

Of its five biggest unsecured creditors, four are vehicles set up by German megabank Deutsche Bank to buy bonds from MF Global. Its single biggest unsecured creditor is JPMorgan Chase Bank, NA, which bought more than $1.2 billion in bonds.

The case was assigned to Judge Stuart Bernstein, who gained attention this summer for a ruling that might make it harder for victims of Bernard Madoff’s Ponzi scheme to recoup their losses.

Bernstein ruled against the trustee trying to recover investors’ losses from an unrelated $700 million fraud. The trustee sued Wachovia, saying the bank ignored obvious signs of fraud. Bernstein said the bank’s suspicions were not the same as actual knowledge of the scheme.

MF Global shares plunged 66% last week. Besides the loss of $186.6 million for the fiscal second quarter, investors were spooked when MF Global’s debt was downgraded to junk status. Credit-rating agencies expressed concern about the firm’s $6 billion portfolio of European debt

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