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Unsecured Creditors' Committee of MF Global Includes JPMorgan Chase, Bank of America, and Wilmington Trust

Several big-name banks, including JPMorgan Chase, Bank of America, and Wilmington Trust Company, made the cut for the companies that were appointed by the United States Trustee's Office to the unsecured creditors' committee for MF Global Holdings Ltd., the futures brokerage company now in bankruptcy. MF Global Holdings' bankruptcy case is taking place in the Southern District of New York in the Manhattan Division. Also on the committee are Elliott Management Corporation and Caplin Systems Limited. These entities are scrambling to recover monies in the bankruptcy case for one of the top 10 largest bankruptcies in American history (sources vary over whether the case is the seventh or eighth largest).

Formation of the MF Global Holdings' Unsecured Creditors' Committee

The unsecured creditors' committee was recently assembled as a result of a large meeting in the Millennium Hilton Hotel in Manhattan. That meeting attracted dozens of attorneys, debt traders, and creditor parties. The meeting drew so many interested parties, in part, because the unsecured creditors' committee has the authority to sue advisers of the defunct corporation in bankruptcy, investigate and search for overseas assets, and investigate any potential commingling of consumer accounts and funds through the collapsed brokerage entity.

Role of the Office of the United States Trustee in Formation of Unsecured Creditors' Committee

The Office of the United States Trustee is part of the Justice Department and is charged with oversight of bankruptcy cases. Part of that oversight includes selecting members for the unsecured creditors' committee from the largest unsecured creditors who express an interest and willingness to serve on the committee. Eligible creditor entities are sent a boilerplate form from the Trustee's Office to return with an indication of preferences with respect to service on the creditors' committee.

Roles and Functions of the Unsecured Creditors' Committee

The committee is a powerful constituency in the bankruptcy process and often takes an active role in the case and proceedings. The unsecured creditors' committee is permitted to hire counsel and even financial professionals to analyze a debtor's proposed plan of reorganization and make recommendations as to how best to fund recovery to the unsecured creditors. Those lawyers and financial professionals are paid from funds of the debtor entity, even though they are employed to work on behalf of the unsecured creditor body.

If you have a claim in the bankruptcy case of MF Global Holdings or any other bankruptcy case, it is prudent to consult a bankruptcy attorney or creditors' rights lawyer. Counsel familiar with the bankruptcy process can advise you of rights, remedies, and available courses of action within the bankruptcy context (and often outside of it, as well). It may also be advisable to contact the Office of the U.S. Trustee and/or a trustee in the particular bankruptcy case for further information.