MF Global bankruptcy trustee won’t ask for employee bonuses

The bankruptcy trustee in charge of handling assets for MF Global Holdings told lawmakers Tuesday he had no plans of paying employees bonuses to stay on board and help with recovering lost customer funds.

“I want to make it very clear, it was never my intention to pay any bonuses,” Lois Freeh, the bankruptcy trustee, told the Senate Banking Committee, “I never had a plan in place to pay any bonuses to senior executives.”

MF Global was forced to retain a bankruptcy attorney and file for Chapter 11 debt protection last October when the company collapsed, and lost billions of dollars of segregated customer funds.

Last month, lawmakers and the investment firm’s former customers were outraged when report surfaced that Freeh would be asking for a retention plan as incentive for employees to continue working for the defunct investment firm.

There are currently 15 employees, assisting Freeh with the bankruptcy, who he referred to as “worker bees” and not “insiders” responsible for the firm’s demise. He also stated if the employees left he would be forced to hire an accounting firm, which would cost three times as much as the employees are currently being paid.

In another turn in the MF Global case, a customer has requested that Freeh change the filing to Chapter 7 liquidation, citing that keeping the Chapter 11 filing is adversely affecting the prospect that investors will recover their lost funds.

Bankruptcy lawyers advise insolvent companies to file for Chapter 11 bankruptcy when they hope to continue operations. Experienced bankruptcy attorneys are tasked with helping a troubled company reduce or eliminate their liabilities so they can return to solvency.