MF Global parent sued by fired employees

MF Global Holdings Ltd. and its bankrupt broker-dealer attracted at least three lawsuits Monday from former employees who said they were terminated without cause and seek to recover 60 days’ wages and benefits.

Todd Thielmann and Pierre-Yvan Desparois said they were acting for all fired employees in their suit against the parent company, filed after the liquidator of broker-dealer MF Global Inc. dismissed 1,066 employees last week as part of the shutdown of the firm. Natalia Sivova and Anthony Abruzzo each sued the broker-dealer along with its parent in separate suits.

Employees didn’t get 60 days’ advance written notice of the firings, as required by the Worker Adjustment and Retraining Notification Act, the plaintiffs said in court filings Monday in Manhattan bankruptcy court. Under bankruptcy law, wage claims may get priority status with a possibility of being paid in full. 

“They have a chance of being deemed to be a priority claim and being paid 100 cents on the dollar, assuming there is enough to go around,” said Chip Bowles, a bankruptcy lawyer at Greenebaum Doll & McDonald PLLC in Louisville, Kentucky, who isn’t involved in the case. “The judge might tell them to go and file claims instead of suing the company.”

MF Global Holdings employed more than 2,800 people internationally, according to the lawsuit against the parent company. Desparois was a vice president in credit-risk management at MF Global’s New York office, which employed 450 people, according to the filing. Thielmann worked as a floor broker at the company’s Chicago offices, which employed 600 people.

“Plaintiffs and all similarly situated employees seek to recover 60 days’ wages and benefits, pursuant to the WARN Acts, from defendants,” according to the filing by the Philadelphia law firm, Klehr Harrison Harvey Branzburg LLP. They are asking the judge to confer class-action, or group, status on their suit, which also names MF Global Finance USA Inc. as a defendant. (Bloomberg)

To get their claims paid, the plaintiffs first must prove they’re entitled to the money, Nancy Rapoport, a bankruptcy law professor at the University of Nevada, Las Vegas, said in an e-mail.

Kenneth Ziman, a lawyer for the New York-based parent company, didn’t immediately respond to an e-mail seeking comment on the suit.

“The trustee acted appropriately in connection with the termination of employees as part of the court-mandated liquidation and wind-down of MF Global Inc.,” said Kent Jarrell, a spokesman for James Giddens, who is liquidating the broker dealer, in an e-mail.

The MF Global parent sought bankruptcy court protection Oct. 31 after making bets on European sovereign debt and getting margin calls. The firm listed liabilities of $39.7 billion and assets of $41 billion in Chapter 11 papers. The Securities Investor Protection Corp. sued the broker-dealer the same day to put it in liquidation. 

caption: Pierre-Yvan Desparois, a former credit analyst with MF Global, speaks to reporters while leaving the company’s headquarters in New York on Friday. 

(Bloomberg)