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Judge's Opinion on MF Global Cash Collateral Motion

Judge's Opinion on MF Global Cash Collateral Motion

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Published by DealBook
Opinion by Judge Martin Glenn approving MF Global's use of about $21.3 million in cash on hand.
Opinion by Judge Martin Glenn approving MF Global's use of about $21.3 million in cash on hand.

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Published by: DealBook on Dec 14, 2011
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02/24/2014

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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK NOT FOR PUBLICATION
In reMF GLOBAL HOLDINGS LTD.,
et al.,
Debtors.Case No. 11-15059 (MG)
MEMORANDUM OPINION APPROVING USE OFCASH COLLATERAL ON A FINAL BASIS
 A P P E A R A N C E S:
 
PEPPER HAMILTON LLP
 Proposed Special Counsel for Louis J. Freeh, Chapter 11 Trustee
Hercules Plaza, Suite 51001313 N. Market Street, P.O. Box 1709Wilmington, Delaware 19899By: David B. Stratton, Esq.David M. Fournier, Esq.MORRISON & FOERSTER LLP
 Proposed Counsel for Louis J. Freeh, Chapter 11 Trustee
1290 Avenue of the Americas New York, New York 10104By: Brett H. Miller, Esq.HUGHES HUBBARD & REED LLP
Counsel for James W. Giddens, Trustee for the SIPA Liquidation of MF Global Inc.
One Battery Park Plaza New York, New York 10004By: Jeffrey S. Margolin, Esq.DEWEY & LEBOEUF LLP
 Proposed Counsel for the Statutory Creditors’ Committee of MF Global Holdings Ltd., et al.
1301 Avenue of the Americas New York, New York 10019By: Martin J. Bienenstock, Esq.Irena Goldstein, Esq.SIMPSON THACHER & BARTLETT LLP
Counsel to JPMorgan Chase Bank, N.A.
425 Lexington Avenue
11-15059-mg Doc 272 Filed 12/14/11 Entered 12/14/11 13:03:27 Main DocumentPg 1 of 7
 
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 New York, New York 10017By: Peter v. Pantaleo, Esq.STUTZMAN, BROMBERG, ESSERMAN & PLIFKA
 Attorneys for Certain MF Global Inc. Claimants
2323 Bryan Street, Suite 2200Dallas, Texas 75201By: Sander L. Esserman, Esq.JAMES L. KOUTOULAS
Counsel for the Commodity Customer Coalition
 190 S. LaSalle St., #3000Chicago, IL 60603By: James L. Koutoulas, Esq.HALPERIN BATTAGLIA & RAICHT, LLP
 Attorneys for Queen’s Quay Avante Limited 
555 Madison Avenue, 9
th
Floor  New York, New York 10022By: Walter Benzija, Esq.McGUIREWOODS LLP
 Attorneys for Virginia Power Energy Marketing, Inc. Dominion Energy Marketing Inc., and Virginia Electric and Power Company
1345 Avenue of the Americas, 7
th
Floor  New York, New York 10105By: Dion W. Hayes, Esq.Shawn R. Fox, Esq.FORD MARRIN ESPOSITO WITMEYER & GLESER, L.L.P.
 Attorneys for Sapere
Wall Street Plaza New York, New York 10005By: John J. Witmeyer III, Esq.J. CHRISTOPHER GIORDANO
 Pro Se
WILLIAM SOMERS
 Pro Se
MARK KEELE
 Pro Se
11-15059-mg Doc 272 Filed 12/14/11 Entered 12/14/11 13:03:27 Main DocumentPg 2 of 7
 
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 MARTIN GLENNUNITED STATES BANKRUPTCY JUDGE
Louis J. Freeh, the Chapter 11 Trustee (the “Chapter 11 Trustee”) of MF Global HoldingsLtd. and MF Global Finance USA Inc. (collectively, the “Debtors”), seeks an order approvingthe continued use of cash collateral on a final basis. An order approving interim use of $8million of cash collateral was approved as part of the first-day motions in this case before theChapter 11 Trustee was appointed. (ECF Doc. # 26.) A series of stipulations and orders of theCourt thereafter extended the time period for use of the same $8 million of cash collateral, whileadjourning the date of the final hearing. (ECF Doc. ## 65, 118, 204, 255.) Approximately $25million remains on deposit in JPMorgan Chase Bank (“JPMC”) in an account held in the name of Man Group Finance Inc., a predecessor to MF Global Finance USA Inc. (“MFGF”). TheChapter 11 Trustee has reached a proposed stipulation and order with JPMC permitting thecontinued use of the full amount of cash collateral in the account. Numerous objections have been filed; all but one has been resolved, pressed by customers of MF Global Inc. (“MFGI”).The customers’ objection alleges that “customer property” which was supposed to be held insegregated accounts by MFGI was improperly transferred in the days or weeks before thecollapse of the Debtors. The objectors suspect but have no proof to support their assertion thatsome or all of the $25 million in the JPMC account derives from “customer property.”The Chapter 11 Trustee persuasively argues that funds on deposit in an account in thename of the Debtors are presumed to be property of the Debtors’ estate. (ECF Doc. # 257 ¶¶ 1– 7.)
See McHale v. Boulder Capital LLC (In re 1031 Tax Group, LLC)
, 439 B.R. 47, 70-71(Bankr. S.D.N.Y. 2010);
 L.F.D. Operating Inc. v. Ames Dep’t Stores, Inc. (In re Ames Dep’t Stores, Inc.)
, 274 B.R. 600 (Bankr. S.D.N.Y. 2002) (AJG) (“As a general rule, once funds are
11-15059-mg Doc 272 Filed 12/14/11 Entered 12/14/11 13:03:27 Main DocumentPg 3 of 7

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