MF Global (MF) Goes Bust
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The worst case scenario for MF Global (NYSE: MF) has played out Monday.
The embattled financial firm has filed for Chapter 11 bankruptcy after a last minute fire-sale fell through.
The firm listed estimated liabilities of up to $50 million and estimated assets of as much as $500 million in papers filed in U.S. Bankruptcy Court in Manhattan. The largest unsecured creditors include JPMorgan Chase Bank (NYSE: JPM) with $1.2 billion in claims and Deutsche Bank Trust Co. (NYSE: DB) with $1.34 billion in claims.
Last week things at the firm run by former New Jersey governor Jon Corzine spiraled out of control after the company posted a large loss following losses taken related to European debt exposure. The loss raised liquidity worries and client defections. This is turn triggered a credit downgrade, more client defections and loss of counterparty confidence. The company pulled down its unused credit facility signaling things really were "that bad".
Earlier Monday, New York Federal Reserve said it suspended MF Global's designation as a primary dealer.
"The Federal Reserve Bank of New York has informed MF Global Inc. that it has been suspended from conducting new business with the New York Fed. This suspension will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities set out in the New York Fed's policy, 'Administration of Relationships with Primary Dealers,' or until the New York Fed decides to terminate MF Global’s status as a primary dealer."
MF was in late talks with Interactive Brokers Group, Inc. (Nasdaq: IBKR) to sell certain assets, but those talks have since broken off.
The embattled financial firm has filed for Chapter 11 bankruptcy after a last minute fire-sale fell through.
The firm listed estimated liabilities of up to $50 million and estimated assets of as much as $500 million in papers filed in U.S. Bankruptcy Court in Manhattan. The largest unsecured creditors include JPMorgan Chase Bank (NYSE: JPM) with $1.2 billion in claims and Deutsche Bank Trust Co. (NYSE: DB) with $1.34 billion in claims.
Last week things at the firm run by former New Jersey governor Jon Corzine spiraled out of control after the company posted a large loss following losses taken related to European debt exposure. The loss raised liquidity worries and client defections. This is turn triggered a credit downgrade, more client defections and loss of counterparty confidence. The company pulled down its unused credit facility signaling things really were "that bad".
Earlier Monday, New York Federal Reserve said it suspended MF Global's designation as a primary dealer.
"The Federal Reserve Bank of New York has informed MF Global Inc. that it has been suspended from conducting new business with the New York Fed. This suspension will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities set out in the New York Fed's policy, 'Administration of Relationships with Primary Dealers,' or until the New York Fed decides to terminate MF Global’s status as a primary dealer."
MF was in late talks with Interactive Brokers Group, Inc. (Nasdaq: IBKR) to sell certain assets, but those talks have since broken off.
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