A preliminary report filed by MF Global’s bankruptcy trustee,
James W. Giddens shows that the company used segregated customer funds to
finance their daily activities.
The report shows that MF Global began to use customer funds
beginning on October 26th as the company began facing a liquidity
problem, according to the Chicago Tribune. The funds were used to conduct the
firm’s daily activities.
Almost $120 billion in customer funds went missing and
bankruptcy trustees have been trying to trace where the funds went. Initially
smaller sums were taken from the account but MF Global began taking large
amounts after they ran into financial difficulties. In the week prior to MF’s
bankruptcy filing $105 billion were transferred from customer accounts.
MF Global’s customers are attempting to recover the lost
fund but are facing some hurdles because unsecured creditors take priority in
the bankruptcy proceedings.
Giddens is trying to determine which entities received the
customer segregated funds.
MF Global is one of the eight largest bankruptcies in
history.
When a business is close to failing they can hire a bankruptcy attorney to advise them on
what course of action to take.
If possible a bankruptcylawyer will suggest a filing that will allow the business to continue while
they settle their debts with creditors. Some businesses cannot continue
operations and must have a bankruptcy attorney work on reducing or eliminating their debt
liabilities.
