Judge: MF Global client's treatment motion 'bordering on frivolous'

By Caroline Salls

Pittsburgh, March 6 - Former MF Global client Adam Furgatch's motion to treat MF Global Holdings, Ltd. as a "person" instead of a corporation was denied Tuesday by the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Furgatch's motion claimed that because the U.S. Supreme Court has ruled that a corporation such as MF Global Holdings is a "person," then subsidiary brokerage MF Global, Inc. is a "child" of the MF Global Holdings parent company.

Furgatch said in a Feb. 7 news release that the filing cited specific Bankruptcy Code statutes that mandate that a child's support claims must have super-priority status over all other unsecured creditors.

"If corporations are persons, JP Morgan Chase and all other unsecured creditors will just have to get in line...the child comes first," Furgatch said.

The motion also asked the court to order parent company trustee Louis Freeh to immediately release all child support funds needed to restore the stricken, injured "brokerage child person" to health from the parent company's declared $41 billion in assets.

The requested child support funds included the reported $1.2 billion in customer segregated funds that have yet to be returned to the ex-MF Global Brokerage customers.

Furgatch said he was missing at least 30% of his pre-bankruptcy MF Global account funds.

According to Tuesday's ruling, Furgatch had no legal support for his argument.

"Furgatch's motion is procedurally improper and substantively meritless to the point of bordering on frivolous," judge Martin Glenn said in his ruling.

"Therefore, the court denies the motion in its entirety with prejudice and cautions Furgatch's counsel that the court has the power to impose sanctions for frivolous arguments.

"The professionals in these cases are working diligently to complete a successful wind-down of the debtors' estates and provide a recovery to all creditors; motions such as this one only slow that process down and increase administrative expenses to the detriment of all creditors and commodity customers."

MF Global Holdings, a commodity and derivatives broker based in New York, filed for bankruptcy on Oct. 31. Its Chapter 11 case number is 11-15059.

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