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« Lawyer Tells Bankruptcy Judge: All MF Global Funds Accounted For, Held by Brokerage | Main | JPMorgan: MF Global’s Bankruptcy Filing Is Wrong »
Tuesday
Nov012011

JPMorgan Seeks Lien On ALL MF Global Assets

Bloomberg

JPMorgan Chase & Co. (JPM) seeks a lien on all of MF Global Holdings Ltd.’s assets and may have a lien on its operating account balance of $26.6 million, the bank said.

MF Global, which filed for bankruptcy with assets of $41 billion, has five operating accounts, all with JPMorgan. The bank may have a lien on the entire balance because of so-called setoff rights related to a credit line to MF Global where it acts and agent and lender, the New York-based bank said in a filing.

“JPMorgan asserts, and the debtors admit, that ‘by virtue of such setoff rights, such funds may be subject to liens in favor of’” JPMorgan, it said.

Lenders move to protect themselves after a bankruptcy filing. JPMorgan, the biggest U.S. bank, made the statement in an objection filed in U.S. Bankruptcy Court in Manhattan today to a cash management plan proposed by the company. Limits should be placed on the company’s use of cash, it said.

JPMorgan holds less than $80 million of the MF Global’s debt, said Joseph Evangelisti, a spokesman for the New York- based bank and acts as an agent to lenders for a $1.2 billion credit line to MF Global Holdings and a $300 million credit line to its broker-dealer unit.

Protect Collateral

JPMorgan seeks the lien on all of MF Global’s assets to protect its collateral, including proceeds of potential lawsuits, as well as reimbursement for its own legal fees in the bankruptcy, it said in the filing. The bank also asked Bankruptcy Court judge Martin Glenn in Manhattan to limit intercompany transfers and order the company to deliver it a budget and full list of its assets. MF Global has asked to have until Jan. 30 to report a full list of its assets and debts. Glenn will hold a hearing today beginning at 3 p.m.

“Although JPMorgan is hopeful the debtors will be able to generate meaningful recoveries for creditors, no one, including the debtors, can predict whether, when and to what extent this may actually occur,” lawyers from Simpson, Thacher & Bartlett LLP wrote, representing the bank.

JPMorgan said it won’t allow its collateral to backstop payment of the administrative expenses for MF Global’s bankruptcy. MF Global asked for a carve-out for some of its professionals of $4 million, which would apply if a reorganization fails and there aren’t enough assets to pay for the costs of liquidation.

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Reader Comments (2)

I'd like to say "isn't it funny how when the banks start losing money they don't like it and do whatever they can quickly to protect themselves from loss" but in reality it's just another show of how they view themselves as more important than the 99%. They steal from us, they minimize our concerns and protests, they laugh at us and get their dogs (the local cops) to try to get us to riot and all along they're the real criminals. I think every executive that took a bonus, bailout money, TARP funds or other benefit from the financial scandals should go to jail, do not pass go, DO NOT COLLECT $200 DOLLARS!

All this going on around the world and not one word of support from our leaders except for Ron Paul......VOTE RON PAUL 2012!!!
Nov 1, 2011 at 8:50 PM | Unregistered CommenterWANMAN

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