A bankruptcy judge on Wednesday green-lighted about $17 million in fees for the law firm that employs James Giddens, the trustee working to recover money for former customers of MF Global's broker-dealer unit.
Judge Martin Glenn granted Hughes Hubbard & Reed LLP's fee request at a hearing on Wednesday in U.S. Bankruptcy Court in Manhattan. The fees cover the period from Giddens' appointment on Oct. 31 through Feb. 29. Fees incurred since then have not been submitted to the court.
The Hughes Hubbard team had already been paid, but had not gotten approval from Glenn, who is allowed to reject fees as unreasonable, duplicative, unnecessary or otherwise improper. Had Glenn rejected any of the firm's fees, Hughes Hubbard would likely have credited the total toward future bills rather than given money back, Giddens' spokesman, Kent Jarrell, told Reuters in April.
MF Global declared bankruptcy in October, freezing customer accounts in its broker-dealer unit. Regulators later found that an estimated $1.6 billion was missing from the client accounts of the company's broker-dealer.
Giddens' team, charged with recovering as much money for customers as possible, billed for roughly $20.1 million for the four-month period, but withheld 15 percent of the total under an agreement with the Securities Investor Protection Corp, an insurance fund for securities customers that taps trustees like Giddens to liquidate failed brokers.
The sides also struck a deal under which Giddens and his team discounted their hourly rates by 10 percent. Giddens' discounted rate in MF Global's liquidation is about $894.
High legal fees are a closely-scrutinized topic among bankruptcy regulators. The U.S. Justice Department's bankruptcy trustee program held a hearing last month to get feedback on proposed changes, such as asking bankruptcy lawyers to work off a budget.
Two other law firms that had advised the trustee, Hayens and Boone LLP and Slaughter and May, also secured approval of fees for about $500,000 and $1.38 million, respectively.
Separately at Wednesday's hearing, Glenn approved a settlement between Giddens and MF Global's Canadian affiliate under which the affiliate will return about $60 million to Giddens to be distributed to customers that traded on foreign exchanges.
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