11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 1 of 7

Main Document

Vincent P. Schmeltz III (Pro Hac Vice Pending) Deborah L. Thorne (Pro Hac Vice Pending) Kathleen L. Matsoukas (KL-1821) BARNES & THORNBURG LLP One N. Wacker Drive, #4400 Chicago, IL 60606 (312) 357-1313 David M. Powlen (DP - 0678) BARNES & THORNBURG LLP 1000 N. West Street, Suite 1200 Wilmington, DE 19801 (302) 888-4536

Attorneys for Commodity Customer Coalition

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: MF GLOBAL HOLDINGS, LTD, et al., Debtors. In re: MF GLOBAL INC., Debtor. Case No. 11-02790 (MG) (SIPA) Chapter 11 Case No. 11-15059 (MG) Jointly Administered

MOTION FOR APPOINTMENT OF AN OFFICIAL COMMITTEE OF COMMODITY BROKER CUSTOMERS Certain commodity broker customers (the Commodity Customer Coalition) of MF Global Inc. (MFGI), move pursuant to sections 105, 503 and 705 of Title 11 of the United States Code (the Bankruptcy Code) for an order: (i) directing the Office of the United States Trustee to appoint an official committee of commodity broker customers of MFGI in the above-captioned proceeding (the MFGI Proceeding), and (ii) authorizing the SIPA Trustee to pay fees and expenses

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 2 of 7

Main Document

of committee professionals as administrative expenses of the commodity customer property estate (the Motion) subject to appropriate notice, opportunity for hearing and approval of this Court. In support of this motion, the Commodity Customer Coalition respectfully represent as follows: Background 1. This case is proceeding as a SIPA liquidation of a securities broker-dealer, as well as

a chapter 7 liquidation of a commodity broker. As this Court is well aware, this poses significant problems and challenges to the SIPA trustee, the other constituencies in this case and this Court. 2. The Commodity Customer Coalition (CCC) is a grass roots organization and

represents a growing number of former MF Global clients, currently numbering over 7,000.1 3. On behalf of the group it represents, the CCC has already filed several pleadings with

the Bankruptcy Court. One seeks to protect the primacy of customer segregated funds over the claims of creditors, while the other seeks a swift alternative claims process as opposed to the arduous one proposed by the SIPC Trustee. The CCC has objected to the claims procedure that was proposed by the Trustee because it is not designed to provide a speedy return of cash and other liquid assets contained in various segregated accounts to the owners of each account. 4. At the direction of this Court, on November 17, 2011, representatives of the CCC met

with the Trustee and others in an effort to craft a unified approach to the distribution of commodity customer funds to those whose funds have been frozen in this proceeding. Unfortunately no

resolution was reached and the CCC believes now, more than ever, that this Court should direct the
To date, the CCC has been organized by a volunteer group of commodity futures professionals who are working on a pro bono basis to represent MF Global customers in the bankruptcy process. In a very short time, the group has created electronic communication networks, a website, organized thousands of customers with frozen assets, and is working on behalf of all MF Global commodity account holders to ensure the swift and complete return of these assets. 2
1

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 3 of 7

Main Document

Office of the United States Trustee to appoint a committee comprised of the various factions which comprise the commodities industry and are creditors in this case. 5. The commodity broker customers have enormous amounts of cash in frozen

segregated accounts at MFGI. From what the CCC is able to determine, much of what is frozen is in segregated accounts which the CCC believes should be and is capable of being liquidated quickly. Many of the customers who are part of the CCC are small commodity investors, including farmers and retired individuals. Their life savings and this years income are threatened, and many cannot afford individual counsel. Jurisdiction 6. The Court has jurisdiction over this Motion and the MFGI Proceeding pursuant to 28

U.S.C. 157, 1334 and 15 U.S.C. 78eee (a)(3), (b)(2) and (b)(4). The statutory predicates for the relief sought herein are sections 105, 503 and 705 of the Bankruptcy Code. Appointment of a Committee Is Appropriate in this Case 6. Section 705 of the Bankruptcy Code provides for the appointment of a committee in

certain circumstances where the administration of the estate would benefit from the input of a committee. Moreover, under section 105 of the Bankruptcy Code, this Court is authorized to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]. 7. On November 15, 2011, certain other commodity broker customers filed a motion

[Docket No. 161] seeking to appoint five specific individuals to an Official Committee of Commodity Broker Customers. The CCC respectfully disagrees with the relief requested by their motion. Although the CCC believes that appointment of a commodity industry creditors committee

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 4 of 7

Main Document

is appropriate, the CCC believes the Court should order the Office of the United States Trustee to appoint a representative and balanced committee of the commodity industry creditors in this case. 8. The appointment of a balanced and representative committee comprised of the

various commodity industry creditor parties in this case will both aid the Trustee in his job but will also provide a voice for commodity industry creditors who have been so greatly impacted by the inability to gain access to their segregated accounts. The appointment of an official committee of commodity customers would provide an additional fiduciary that will provide a voice and lines of communication to and for this important constituency in proceedings before the Court and in interactions with the Trustee. Transparency in this proceeding within the commodity industry is essential to providing confidence that the process in this Court is fair, just and that all parties have the ability to be heard. Moreover, the members of an official commodities industry committee would provide valuable expertise concerning the issues unique to foreign commodity exchanges, futures, options and physicals trading. 9. In other chapter 7 or chapter 11 bankruptcy cases where a particular group effectively

did not have a voice, courts have appointed additional committees. This is particularly true where there has been a question as to whether representation was adequate. In such cases, courts have directed the Office of the United States Trustee to appoint additional Chapter 11 committees to insure a fair and transparent process. See In re Fleming Cos., Inc., et al, Case No. 03-10945 (MFW), Docket No. 5580 (appointment of Official Committee of Reclamation Claimants was warranted because the Official Committee of Unsecured Creditors did not adequately represent the reclamation creditors interests). See also In re Lehman Bros. Holdings, Inc., No. 08=135555 (JMP), Hrg Tr. Aug. 30, 2011, at 16 (Debtors counsel acknowledges important role played by official and unofficial committees in negotiating chapter 11 plan), attached hereto as Exhibit A.

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 5 of 7

Main Document

10.

There is no insurance for such commodity-related interests as there are for the

securities industry interests. Thus, it is extremely important that the commodity industry and customers have a voice, and that the process be as transparent as possible. Accordingly, the entry of an Order directing the appointment of a commodity committee is entirely appropriate under the circumstances. WHEREFORE, the CCC requests the entry of an Order (1) authorizing and directing the Office of the United States Trustee to appoint an official committee of commodity industry creditors, (2) determining that the compensation and expenses of any professionals employed by the official commodity committee be paid as an administrative expense pursuant to further order of this Court, and (3) providing for such other relief as this Court deems just. Dated: November 18, 2011 By: /s/ Deborah L. Thorne Vincent P. Schmeltz III (Pro Hac Pending) Deborah L. Thorne (Pro Hac Pending) Kathleen L. Matsoukas (KL-1821) BARNES & THORNBURG LLP One N. Wacker Drive, #4400 Chicago, IL 60606 (312) 357-1313 David M. Powlen (DP 0678) BARNES & THORNBURG LLP 1000 N. West Street, Suite 1200 Wilmington, DE 19801 (302) 888-4536

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 6 of 7

Main Document

Vincent P. Schmeltz III (Pro Hac Vice Pending) Deborah L. Thorne (Pro Hac Vice Pending) Kathleen L. Matsoukas (KL-1821) BARNES & THORNBURG LLP One N. Wacker Drive, #4400 Chicago, IL 60606 (312) 357-1313 David M. Powlen (DP - 0678) BARNES & THORNBURG LLP 1000 N. West Street, Suite 1200 Wilmington, DE 19801 (302) 888-4536 Attorneys for Commodity Customer Coalition UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: MF GLOBAL HOLDINGS, LTD, et al., Debtors. In re: MF GLOBAL INC., Debtor. Case No. 11-02790 (MG) (SIPA) Chapter 11 Case No. 11-15059 (MG) Jointly Administered

CERTIFICATE OF SERVICE I, the undersigned, an attorney, certify that I served a true and correct copy of the foregoing Motion for Appointment of an Official Committee of Commodity Broker Customers on all counsel of record via the Courts CM/ECF system on this 18th day of November, 2011. In addition, via Federal Express Overnight Saturday Delivery to the following: J. Gregory Milmoe, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Anson Frelinghuysen, Esq. Hughes Hubbard & Reed LLP One Battery Park Plaza New York, NY 10004

11-02790-mg

Doc 354

Filed 11/18/11

Entered 11/18/11 18:44:35 Pg 7 of 7

Main Document

Martin J. Bienenstock, Esq. Dewey & LeBoeuf LLP 1301 Avenue of the Americas New York, NY 10019 Harold S. Novikoff, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Stephen J. Obie, Esq. CFTC 140 Broadway, 19th Floor New York, NY 10005 Peter V. Pantaleo, Esq. 425 Lexington Avenue New York, NY 10017

Vincent E. Lazar, Esq. Jenner & Block 353 North Clark Street Chicago, IL 60654 Martin B. White, Esq. Robert B. Wasserman, Esq. CFTC 1155 21st Street, N.W. Washington, DC 20581 Lauren T. Attard Securities Investor Protection Corporation 805 15th Street, N.W. Suite 800 Washington, D.C. 20005-2215 United States Attorneys Office For the Southern District of New York 86 Chambers Street New York, NY 10007

By:

s/ Deborah L. Thorne Deborah L. Thorne BARNES & THORNBURG LLP One N. Wacker Drive, #4400 Chicago, IL 60606 (312) 357-1313