MF Global’s $ 600 Million Fiasco – The Latest Example of the Intersections Between Bankr
The MF Global fiasco has left $ 600 million missing, and 38,000 customer accounts being scrutinized as to what happened. Tort and contract claims will follow, and/or are pending, subject to the bankruptcy stay of all litigation. What to do?
Once again, as is true for many mass claims, chapter 11 is the primary vehicle being used to cope with the problems. Investigation is happening, findings will be announced, and the guilty will be pilloried in the media, and perhaps even punished. But, those steps matter less to the people who’ve lost money – maybe all or much of their asset base for some people. So, it is imperative that efficient and lawful intersections are built between the claiming processes that exist in our federal and state court systems, regulatory systems, and insurance claiming. And, consider also that there no doubt are non-U.S. claimants. So, international intersections also are needed.
Today, however, intersections have not been built between claiming systems. As a result, bankruptcy courts are making ad hoc decisions, and much time and money are being wasted. It is well past time for intersections to have been built by federal rules committees, ALI, The National Conference of State Courts, and other policy-making groups.
When intersections are built, the policy-makers need to understand the many disasters that have occurred in the ad hoc decision-making commonly known as asbestos bankruptcies. The governing statutory term, section 524(g) has proved to be deeply flawed. The problems are exacerbated by a material lack of meaningful transparency into the facts and outcomes arising from claims submitted to court-created trusts and funds.
For specifics on the MF Global fiasco and the bankruptcy-court proceedings, the best source seems to be the NYT’s DealBook. The posts (here and here) include explanations and links to bankruptcy court filings.