It seems another brawl is on the horizon, this time between the fiduciaries handling MF Global's chapter 11 proceedings and MF Global's proceedings under the Securities Investor Protection Act in the US. Related coverage by Bloomberg is reproduced below.
To be sure, the unwinding of MF Global raises a host of provocative legal issues. It is alleged that customer funds were not segregated properly and ultimately misappropriated, that management was at least negligent, perhaps complicit.
It seems it will be difficult for the civil justice system to sort out the resulting mess in a manner that get funds into the right hands any time soon.
It also seems that protracted legal proceedings are not in the interests of customers, creditors and other parties affected by MF Global's collapse because they will be expensive.
Presumably, the Department of Justice will monitor fees, having recently questioned the exorbitant tabs of professionals in Mega chapter 11 cases. Such efforts and parallel efforts overseas may have the salutary effect of leaving more funds available for distribution.
Still, absent a game plan for an equitable allocation of MF Global distributions, is it not inevitable that there will be delays in payment and that the tab for professional fees will be astronomical? If so, what would be a good way to streamline proceedings? Cross-border protocols? Alternative dispute resolution?
I welcome related questions and comments.