NEW YORK (Reuters) - The trustee tapped to control the assets of MF Global Holdings MFGLQ.PK promised an “independent” approach to the futures broker’s bankruptcy in his first public comments since accepting the post.
Former FBI Director and federal judge Louis Freeh spoke briefly at a hearing on Wednesday in U.S. Bankruptcy Court in Manhattan, telling Judge Martin Glenn he understood the “urgency” of the case.
“I will commit to doing this job in the most efficient way while keeping my independence,” Freeh said.
Not to be confused with James Giddens, the trustee charged with winding down MF’s broker-dealer unit, Freeh was appointed to take over the assets of the MF parent company in bankruptcy. Such appointments are rare, and are usually made when a bankrupt company’s own leaders are deemed unfit or unable to handle the job.
MF’s chief executive, former New Jersey Governor Jon Corzine, resigned earlier this month, after the highly leveraged company filed for bankruptcy with about $40 billion in liabilities. It was made insolvent by losses on big bets on European debt.
While no accusations of wrongdoing have been levied, authorities are investigating a massive shortfall in MF’s customer fund pool and are trying to determine whether MF improperly commingled those funds with its own money.
Freeh told the court he has met with Giddens and with MF’s creditors’ committee, and also visited the company’s offices to address employees.
“I spoke to the people there which, as everyone knows, are in sort of a battered state,” Freeh said. “I introduced myself, told them what we’re going to be doing.”
His appointment means lawyers from law firm Skadden Arps are effectively off the bankruptcy case. Skadden’s Ken Ziman, who represents MF Global Holdings, said he was “passing the baton” to attorneys from Morrison & Foerster, who represent Freeh.
Judge Glenn told Freeh he expected regular updates about progress in the search for MF’s missing customer money, which Giddens has estimated could be about $1.2 billion.
“I read more about it in the press,” Glenn said. “I think parties are entitled to fuller reports here.”
Freeh declined to speak with reporters after the hearing.
Glenn granted an extension through December 9 for MF Global to fund its bankruptcy using $8 million from lender JPMorgan Chase & Co. It is the third time the deal has been extended since the filing of the bankruptcy case on October 31.
The cash, technically property of MF, was pledged as collateral to JPMorgan, but the bank allowed MF to use it in bankruptcy in exchange for a lien on certain assets.
The deal has met with criticism from at least one lawyer representing customers of MF’s commodities brokerage. Attorney James Koutoulas said the bank should not be entitled to any lien on property that could end up belonging to customers.
Koutoulas on Wednesday voiced concern that his objection has been postponed with each extension of the deal, saying the terms of the agreement could leave open “the possibility that MF continues the very sovereign debt trades that caused the bankruptcy to begin with.”
Editing by Steve Orlofsky