Monday, October 31, 2011

MF Global files for Chapter 11 Bankruptcy

MF Global (Man Financials) has filed for bankruptcy on 30th Oct 2011 after a tentative deal with a buyer fell apart. The bankruptcy makes MF Global the most prominent US casualty after Lehman Brothers which collapsed at the height of the US financial crisis in 2008. The New York Federal Reserve suspended MF Global from conducting new business with the central bank.  

In the past week, MF Global posted a quarterly loss, its shares fell by two-thirds and its credit ratings were cut to junk. Jon Corzine, the CEO, was trying to transform MF Global from a brokerage that mainly places customers' trades on exchanges into an investment bank that bets with its own capital.

By filing for bankruptcy, MF Global freezes the value of its free-falling notes and gives potential suitors a clearer picture of the losses they would be taking on.

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