On Monday, MF Global Holdings (NYSE:MF) filed for Chapter 11 bankruptcy protection. The filing comes after talks to sell a variety of assets to Interactive Brokers Group (NASDAQ:IBKR) broke down, and speculation of Goldman Sachs (NYSE:GS) stepping in to rescue the troubled broker turned out to be a pipe dream.
The news came shortly after the New York Fed suspended MF Global from conducting new business with the central bank, also suspending shares from trading as it works on a deal for its future. According to data from the WSJ, the bankruptcy is the 8th-largest in US history. It’s slightly ahead of ninth-place finisher Chrysler, which filed a $39.9 billion bankruptcy in 2009. Let’s take a look at the biggest winners and losers from MF Global’s bankruptcy.
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The market believes Interactive Brokers Group dodged a bullet by not buying MF Global. The company was expected to make an initial bid of about $1 billion during a court supervised auction for the US futures brokerage. However, shares traded more than 1% higher on the news that it would not be buying MF Global. Interactive Brokers turned out to be one of the few winners on Monday. Reports are also indicating that Charles Schwab & Co. (NYSE:SCHW) may be interested in purchasing parts of MF’s business. Shares of the discount broker fell 4.5% on the news.
The bankruptcy documents revealed the 50 largest unsecured creditors of MF Global. The top two creditors turned out to be JP Morgan Chase Bank (NYSE:JPM) and Deutsche Bank Trust Company (NYSE:DB). JP Morgan was MF Global’s largest creditor with $1.2 billion in exposure, while Deutsche Bank has over $1 billion in exposure. Shares of JP Morgan fell more than 4% and Deutsche Bank got hammered more than 10%. Other financial giants (NYSE:XLF) such as Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) also fell sharply on Monday.
Surprisingly, CNBC is the 7th largest unsecured creditor of MF Global, with $845,397. This is most likely due to delayed advertising fees. Shares of parent company General Electric (NYSE:GE) closed more than 3% lower.
Smaller MF Global creditors include Oracle Corporation (NASDAQ:ORCL) and American Express (NYSE:AXP). Oracle is the 14th largest unsecured creditor with $302,704. Meanwhile, American Express is number 33 with only $40,000 of exposure. Shares of both companies closed nearly 3% lower on Monday.
MF Global’s CEO, Jon Corzine, may walk away the biggest winner after making risky sovereign debt bets that went bad. Jon Corzine’s contract calls for a $12 million in severance pay, bonuses, and other benefits. However, it is unclear if he will receive this hefty pay package if there is a takeover of the firm.
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