By Nick Brown
NEW YORK, Sept 12 (Reuters) - Trustees liquidating failed
brokerage MF Global argued on Wednesday that a lawsuit accusing
them of firing employees without proper notice should be thrown
Lawyers for the trustees said at a court hearing that the
firm was not subject to the Worker Adjustment and Retraining
Notification Act, which requires employers to give notice of
mass layoffs, because liquidating companies are not considered
"This was a company that, within milliseconds of filing
bankruptcy, was into a liquidation proceeding," Robert
Hertzberg, a lawyer for Louis Freeh, the trustee winding down
the MF parent company, said at the hearing.
James Giddens, the trustee appointed to liquidate MF's
broker-dealer unit, has also asked for the case to be thrown
U.S. Bankruptcy Judge Martin Glenn declined to rule from the
bench, requesting more information about where some of the
plaintiffs worked and what they did.
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.
MF Global collapsed over fears about its exposure to risky
European debt. Its former chief executive, ex-New Jersey
Governor Jon Corzine, stepped down on Nov. 4, after regulators
found a massive shortfall in the firm's customer accounts.
Giddens has since estimated that shortfall at $1.6 billion.
The employee lawsuit unites Giddens and Freeh as allies in a
case that has more commonly cast them as adversaries. The pair
represent different constituencies of MF Global creditors and
customers, and have butted heads over how to allocate various
pots of money.
Also on Wednesday, Judge Glenn delayed ruling on whether a
$20 million dispute between Giddens and a unit of conglomerate
Koch Industries will be heard in his court. Glenn wants to
consider the matter simultaneously with a similar, $93.5 million
dispute involving ConocoPhillips.
Koch and Conoco, both former MF Global customers, have taken
issue with efforts by Giddens to claw back the proceeds of
letters of credit those firms put up as margin.
The companies say there's nothing for Giddens to recover
because MF Global never drew down on the letters. Giddens argues
that letters used as margin should be treated as cash and
distributed among all customers.
Koch and Conoco want the issue moved to federal district
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