| NEW YORK
NEW YORK May 19 Jon Corzine and other former
insiders of collapsed brokerage MF Global can tap another $10
million of insurance funds to defend lawsuits accusing them of
hastening the firm's downfall, a U.S judge said on Monday.
Judge Martin Glenn granted the request from Corzine and the
others at a hearing in U.S. Bankruptcy Court in New York,
raising to $40 million from $30 million the cap on what the
defendants can draw. Glenn authorized roughly $3.7 million more
to pay the legal fees of defendants no longer involved in the
However, the judge was irked at the request, saying he had
expected the initial $30 million to cover most of the
"Instead it got you to the start of discovery," Glenn said.
More money devoted to legal fees means less is available to
pay other MF Global creditors. While customers of the firm's
broker-dealer unit will receive full recovery, it is unclear how
much will be available for unsecured creditors, who have not
begun receiving payouts.
Corzine, a former New Jersey governor and senator, was MF's
chief executive when it collapsed in 2011. About $1.6 billion in
customer accounts went missing after the firm improperly used it
to try to plug liquidity gaps as it teetered on the brink.
Corzine, former MF Global Chief Operating Officer Bradley
Abelow and other erstwhile executives have been accused in civil
lawsuits of mismanaging the business.
James Giddens, the trustee for MF's former broker-dealer
unit, and Bruce Bennett, a lawyer for its defunct parent
company, said in court papers last week that the defendants are
mounting exorbitant legal bills through excessive defense
tactics. They urged Glenn not to grant the request unless
reporting requirements are put in place to ensure adequate
oversight and cost control.
Glenn said he would not deny the executives the right to
afford their defense. But he criticized how much they have spent
so far and, acknowledging that even the $40 million figure may
not ultimately be enough, urged the defendants and the trustees
to negotiate a final number and agree on how to monitor rising
"If possible, avoid having to come back to court with yet
another contested matter," Glenn added.
(Reporting by Nick Brown. Editing by Andre Grenon)