MF Global, the gift that keeps on giving, to farmers and the grain trade saw another development this week. U.S. Bankruptcy Judge Martin Glenn, in Manhattan, ruled that former executives can tap up to $30 million of an insurance fund to help with legal fees.
The insurance fund, which MF Global customers were trying to preserve to help cover damages caused when the firm "misplaced" $1.6 billion in client money, is now open to executives (in that limited way) for their use.
The judge issued a 32 page decision on the matter, noting that the "soft cap" $30 million for defense cost was appropriate. Glenn also noted the potential hardships for those execs that would be suffered if they were denied access to the funds.
The ruling does not address whether the insurance proceeds actually belong to former customers. About $375 million in insurance proceeds are available, and claims have been submitted against that amount. And the judge says that customers are qualified to object to payment of defense costs.
There are more than 20 lawsuits against former executives that wire reports say could be consolidated.
MF Global filed for bankruptcy on Oct. 31 after a $6.3 billion position on European bonds brought regulatory concerns, a credit downgrade and margin calls.
Opponents to the insurance ruling have said no money should go to help those that caused the problem in the first place. This mess continues to unfold, and has had far-reaching impacts on how farmers trade and their trust of the system that has always protected customer segregated funds.