NEW YORK - A bankruptcy judge approved on Wednesday a deal to allow collapsed broker MF Global Holdings Ltd to finance the rest of its bankruptcy with about $21 million in cash pledged as collateral to JPMorgan Chase & Co, one of its primary lenders.

Judge Martin Glenn green-lighted the deal at a hearing in U.S. Bankruptcy Court in Manhattan, but was also receptive to an objection from customers who worried that the cash could be part of an estimated $1.2 billion in funds missing from their accounts at MF Global's brokerage.

Glenn ordered Louis Freeh, the trustee in charge of MF Global's assets, to investigate whether customers might have a right to the money.

"I'm sensitive to this, because if I wait a year from now, most of the money in this account may have been spent and won't be able to be recovered," Glenn said.

He ordered the probe in a court filing on Wednesday afternoon after mulling the decision during the hearing. The judge gave Freeh 60 days to report his findings to the court , but said he would entertain requests for more time if need be.

Freeh could not immediately be reached for comment.

MF Global went bankrupt on Oct. 31 after losing on $6.3 billion of bets on European debt. Its CEO, former senator and ex-New Jersey Governor Jon Corzine, resigned on Nov. 4 amid concerns about a significant shortfall in customer funds.

Federal investigators are probing whether the shortfall is the result of improper commingling of customer and proprietary assets.

David Fournier, an attorney for Freeh, said he has no reason to believe the money in the collateral account came from customer funds.

The deal allows MF Global to use the collateral, but reserves customers' rights to argue later that they have a right to it. The addition of that clause resolved several customer objection s prior to Wednesday's hearing.

The sole remaining objection, which sparked Glenn's talk of an investigation, came from the Customer Commodities Coalition, the primary customer advocate group in the case.

"Where is the customers' protection?" said James Koutoulas, the coalition's attorney and founder. "I know there's a reservation of rights, but if the money gets spent, you can't really un-spend it."

MF Global has been funding its bankruptcy to this point under an interim order letting it use an $8 million chunk of the collateral.

In testimony on Tuesday before the Senate Agricultural Committee in Washington, Corzine and other executives said they did not know the cause of the customer account shortfall.

Terrence Duffy, executive chair of the Chicago Mercantile Exchange, testified that a CME employee said Corzine was aware of transfers from customer accounts. Such transfers, however, are not inherently illegal under all circumstances.

The liquidation case is In re MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-2790.

The MF Global bankruptcy is In Re MF Global Holdings Ltd, in the same court, No. 11-15059.