Lawmakers and Creditors Outraged Over Bonuses for Executives of Bankrupt MF Global

Last week the trustee overseeing the bankruptcy of MF Global asked for permission to grant bonuses to top executives. This move sparked outrage among the clients whose money went missing and now lawmakers are also expressing their outrage.

Sen. John Tester (D. Mont.) sent a letter to MF’s bankruptcy trustee Louis Freeh calling the proposal “outrageous.” Sen. Chuck Grassley (R. Iowa) also said, “It seems the last thing the executives should see is a six-figure bonus to undo the mess they helped to create,” according to MSNBC.

MF Global collapsed and had the get the assistance of a bankruptcy attorney last fall when they made bad bets on European debt and lost close $1.6 billion in customer’s funds, much of which is still missing. Some of MF Global clients have received less than 75 cents on the dollar of lost money.

Freeh asserts the bonuses are for performance and untangling the mess created by MF Global’s collapse is best carried out by executives who worked for the firm at the time. Under bankruptcy law, performance-bonuses are allowed. But lawmakers insist that these executives should be focused on returning missing customer funds instead of paying out bonuses.

Bankruptcy can be a long process especially when mismanagement and poorly kept records led to a company’s demise. Bankruptcy lawyers are faced with many challenges when a bankruptcy is of such great magnitude like MF Global’s. A troubled business needs an accomplished bankruptcy attorney to help them come up a with a satisfactory debt relief plan that will satisfy creditors.