JPMorgan Says Hedge Funds Have Finger On Scale In MF Global Case

Feb 28 2013 | 10:57am ET

JPMorgan Chase says that the hedge funds behind MF Global Holdings' repayment plan aren't playing fair.

In a bankruptcy court filing Tuesday, the bank said that Cyrus Capital Partners, Knighthead Capital Management and Silver Point Capital are using a "pocket veto" to block its effort to recover nearly $1 billion it lent MF Global just before the futures brokerage collapsed. JPMorgan said the hedge funds are refusing to tell creditors what will happen if they vote "no" on their repayment plan, all but forcing them to vote "yes," even if that means claims will never be pursued.

"By denying information to voters about the result of a 'no' vote, the Creditor Co-Proponents are trying to unfairly influence the voting on the plan," JPMorgan wrote.

The bank is seeking permission to file a lawsuit of its own, going after $928 million of the $931 million it lent to MF Global in October 2011, just days before it filed for bankruptcy. MF Global quickly transferred the $928 million to a subsidiary, MF Global Finance USA, which JPMorgan says creates a claim of the subsidiary against the parent that is not being pursued.

Instead, JPMorgan complains, the hedge funds' plan double-counts the $928 million, diluting the possibility of recovery.

The hedge funds have argued that JPMorgan should be temporarily barred from suing, as such an action would delay repayment.

Hedge fund Aurelius Capital Partners is backing JPMorgan's bid.


In Depth

Part II: Roubini Talks Risk, Recovery And The Threat Of A Triple Dip Recession

Oct 21 2014 | 12:41pm ET

In the second half of our interview with Nouriel Roubini, FINalternatives editor...

Lifestyle

Balyasny Pays Over $6M For Lakefront House

Oct 22 2014 | 10:29am ET

A venture headed by hedge fund manager Dmitry Balyasny just paid $6.2 million for...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.