MF Global trustee sues Breakwater Trading for $8.35 million payment

By Caroline Salls

Pittsburgh, Sept. 21 - MF Global Holdings, Ltd. Chapter 11 trustee Louis J. Freeh filed a lawsuit Friday seeking repayment of $8.35 million plus interest owed by Breakwater Trading, LLC to MF Global Finance USA, Inc. under a credit agreement, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the credit agreement, MF Global Finance USA agreed to make loans or advances to Breakwater to meet original and variation margin requirements in the defendant's commodity accounts established with MF Global Inc. for the purpose of trading futures and options contracts.

Breakwater had an $8.35 million outstanding balance under the credit agreement as of Oct, 28, 2011, the complaint said.

Freeh said he has made a written demand for payment, but Breakwater "has refused to comply with its clear contractual obligation to repay the money it borrowed from [MF Global Finance]."

The trustee said Breakwater's failure to make payment in response to the demand letter constitutes a breach of the credit agreement.

MF Global Holdings, a New York-based commodity and derivatives broker, filed for bankruptcy on Oct. 31, 2011. Its Chapter 11 case number is 11-15059.

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