Jon Corzine and the team of executives who toppled commodities brokerage firm MF Global don’t deserve another $10 million of insurance monies to pay their already “exorbitant” legal bills, a bankruptcy administrator said.
Corzine, the disgraced former MF Global CEO and New Jersey governor, wants the $30 million defense-fund cap lifted, but the court-appointed administrator responsible for liquidating MF Global Holdings Ltd., the brokerage firm’s parent company, is fighting the move.
While the money would come from insurance, it could reduce distributions to other creditors, bankruptcy experts said.
“From February through September 2013, defense fees incurred to date exceed $40 million, a figure that has never been adequately explained or justified and which suggests duplication of efforts,” lawyers for the plan administrator argued in a sharply worded retort.
Lawyers for Corzine and his former colleagues argued that they “have tried hard to keep costs down … [but] the mounting exorbitant defense fees tell a different story,” the lawyers in charge of the estate said.
Corzine’s legal eagles want the cap lifted, saying many of the executives “are unable to pay their defense costs themselves.”
Following MFG’s epic collapse in October 2011, regulators discovered a gaping $1.6 billion loss in customers’ brokerage accounts, which were supposed to have been kept safe and separate from the firm’s money.
Since then, Corzine and some of his fellow executives, like former COO Brad Abelow, have been named defendants in at least 23 separate lawsuits, including by commodity customers and bankruptcy trustees.
Last month, Nader Tavakoli, one of the three members of the board objecting to an increase in defense funds, filed an amended lawsuit against Corzine for masterminding a scheme that led to MF Global’s demise, including artificially inflating revenues.
The Commodities Futures Trading Commission has also sued Corzine for misusing customers’ funds, which Corzine has adamantly denied.