By Ann Saphir
NEW YORK, Sept 12 (Reuters) - A judge on Tuesday dismissed
claims MF Global's trustees fired employees without proper
notice but left the door open for former employees to file an
amended complaint against the bankrupt brokerage's parent
company.
Lawyers for the trustees of failed futures brokerage MF
Global Inc and its parent, MF Global Holdings, had argued that
they were not subject to the Worker Adjustment and Retraining
Notification (WARN) Act, which requires employers to give notice
of mass layoffs, because liquidating companies are not
considered employers.
U.S. Bankruptcy Judge Martin Glenn agreed with that line of
reasoning for MF Global Inc, noting that trustee James Giddens
was appointed under the Securities Investors Protection Act
(SIPA) and was from the get-go charged with liquidating the
company.
That makes Giddens a "liquidating fiduciary" not subject to
the requirements of the WARN Act, Judge Glenn concluded,
dismissing the complaint against MF Global Inc "with prejudice".
MF Global's holding company, which filed for bankruptcy
protection under Chapter 11, may be a different case, Glenn
said.
"The only purpose of the SIPA proceeding is liquidation;
conversely, the chapter 11 cases were filed at least initially
with the hope of reorganization, according to counsel for the
debtors-in-possession," Glenn wrote in his order.
Glenn granted Chapter 11 trustee Louis Freeh's motion to
dismiss, citing gaps in the complaint, but gave the former
employees 30 days to amend their complaint against the parent
company if they chose.
A handful of MF Global employees filed the lawsuit last
year, saying more than 1,000 workers were fired without warning
shortly after the firm's October bankruptcy filing.
An amended complaint against the MF Global parent company
must include allegations about whether the parent company was
indeed attempting to reorganize, Glenn said.
MF Global collapsed nearly one year ago over fears about its
exposure to risky European debt, leaving customers with a $1.6
billion shortfall in their accounts.
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