Corporate “Personhood” Issue in MF Global Case to Be Heard: Court Date Set

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On March 6, 2012, the controversial legal principle of “corporations are ‘persons’” will be raised and argued before a Federal Bankruptcy Court in the ongoing MF Global bankruptcy case. Adam Furgatch, a former MF Global client, filed a motion last week that asks the Court to treat MF Global Holdings, Ltd. as a “person” instead of a corporation. The Court has since placed the motion to be heard on the docket and on the Court calendar.

Adam Furgatch

'The Chapter 11 bankruptcy laws apply equally to corporations and individuals'

On March 6, 2012, the controversial legal principle of “corporations are ‘persons’” will be raised and argued before a Federal Bankruptcy Court in the ongoing MF Global bankruptcy case.

Adam Furgatch, a former MF Global client, filed a motion last week that asks the Court to treat MF Global Holdings, Ltd. as a “person” instead of a corporation. The Court has since placed the motion to be heard on the docket and on the Court calendar.

The Furgatch Motion asserts that because the U.S. Supreme Court has ruled that corporations are to be treated as “persons,” then the “parent” company, MF Global Holdings, by definition, must have a “child” company, MF Global, Inc., the subsidiary brokerage whose customers are still missing at least $1.2 billion in segregated funds. The filing then cites clear, specific statutes in the Bankruptcy Code that mandate that a child’s support claims shall have super-priority status over all other unsecured creditors.

“The Chapter 11 bankruptcy laws apply equally to corporations and individuals,” said Mr. Furgatch in a recent interview. “If, instead of a corporation, the MF Global Brokerage is treated as the Child Person of the Parent Company Person, then the statute on priority status for unsecured creditors’ claims is unambiguous. It’s right there in U.S.C. Title 11, Section 507. Spousal and child support obligations come first, before all other creditors’ claims.”

Mr. Furgatch therefore concludes that “If corporations are persons, JP Morgan Chase and all other unsecured creditors of the parent will just have to get in line…the Child comes first.”

The filing also asks the bankruptcy judge to order the “Parent Company Person” trustee, Mr. Louis Freeh, to immediately release from the parent company’s declared $41 Billion in assets, all child support funds necessary to restore the stricken, injured “Brokerage Child Person” to wholeness and health.

The Furgatch Motion cites Bankruptcy Code statutes that support the judge’s power to grant this request for immediate release of trustee-controlled assets. The child support funds being asked for include the reported $1.2 Billion or more in customer segregated funds that have yet to be returned to the ex-MF Global Brokerage customers. Mr. Furgatch, a resident of Hawaii, is currently missing at least 30% of his pre-bankruptcy MF Global account funds.

The federal judge presiding in the case, Martin Glenn, is expected to promptly consider the motion and make a ruling.

Mr. Furgatch, a fresh, creative voice in financial and political commentary, has published a copy of the motion and additional background information concerning this legal action on his website: http://www.AdamFurgatch.com

The Furgatch Motion has been assigned Court Docket #424 in the case of MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Contact: Lia Martin: 310-464-6225
Lia.Martin(at)digitalmediaminds(dot)com

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