Former MF Global customers will have to wait a little longer than expected to learn how lucrative the broker's liquidation has been for trustee James Giddens and his law firm.
A bankruptcy judge on Monday approved a June 8 deadline requested by Giddens for reporting fees and expenses to the court, meaning the bankruptcy could be in its eighth month before fees are made public.
Giddens had initially gained court approval for a schedule under which his firm, Hughes Hubbard & Reed, would submit its first fee report in March or April. The schedule was revised to bring all lawyers and advisers in the case onto the same filing time table, Giddens' spokesman, Kent Jarrell, said on Monday.
While long, the time frame is not unheard of, and would be about on par with the first fee reports in other major bankruptcies, including the liquidations of Lehman Brothers and Bernard Madoff's fraudulent fund.
But issues related to money in MF Global's bankruptcy are especially sensitive because the broker's former trader clients are missing an estimated $1.6 billion, which vanished from their accounts as the company hurtled toward bankruptcy.
Hughes Hubbard has been getting paid from the corporate estate of MF Global Inc, the company's broker-dealer unit. That estate is separate from assets deemed to be customer property.
Giddens, the lawyer tapped to lead recovery efforts, initially faced criticism from customers who felt high hourly rates could be disincentives to a speedy recovery.
Hughes Hubbard has billed nearly $170 million in three and a half years in the liquidation of Lehman Brothers' broker-dealer, which it also leads. While a comparison is tenuous given differences in the scopes of the cases, Giddens' hourly rate for Lehman -- $891, including a 10 percent discount -- should remain about the same.
Giddens and his legal team have accepted 10 percent rate reductions in MF Global under Hughes Hubbard's agreement with the Securities Investor Protection Corp, an insurance fund for securities customers that taps trustees like Giddens to liquidate failed brokers.
Some expenses normally billable to bankruptcy estates, including many meals and taxi rides, are not billable under the firm's agreement with SIPC, Jarrell said.
The Jon Corzine-led MF Global went bankrupt on Oct. 31 after revealing exposure to risky European debt. Giddens in February said the broker improperly used customer money to fund corporate transactions as it sank, creating a roughly $1.6 billion hole in customer accounts.