European debt crisis claims first US fin co

MF Global Files For Bankruptcy Protection

 MF Global filed for bankruptcy protection for the United States parent company on Monday, the first American financial casualty of the European debt crisis. 
    In the Chapter 11 filing in Federal Bankruptcy Court in Manhattan, the firm's parent company listed assets of $100 million to $500 million and liabilities of more than $1 billion. JPMorgan Chase is identified as the biggest creditor, with a claim of $1.2 billion as the trustee on behalf of bondholders. Deutsche Bank is the second biggest, with a $325 million claim on behalf of bondholders. As part of the bankruptcy, the Interactive Brokers Group had been expected to commit to buy the assets of MF Global, a brokerage and a primary dealer. That would be somewhat similar to what Lehman Brothers did in 2008, when its parent filed for bankruptcy but Barclays bought some of its assets. The deal appears almost certainly dead, according to people briefed on the matter. 
    The bankruptcy filing is a humbling blow for the firm'schief executive, Jon S Corzine, who took the reins of the firm in 2010 after a decade as a United States senator and governor of New Jersey. The law firm of Skadden, Arps, Slate, Meagher & Flom is representing MF Global in the bankruptcy proceedings. The descent into bankruptcy came after a week when investors fled MF Global and credit ratings agencies cut their ratings on the firm to junk status. 
    The agencies said they were concerned that MF Global lacked a sufficient capital cushion if its $6.3 billion in European debt went bad. The firm took agamble in buying the troubled bonds of Italy, Portugal, Spain and Ireland last year, calculating that they would soon recover. Faced with dwindling cash, MF Global tapped a $1.3 billion credit line last week.

MF Global chief Jon Corzine