NEW YORK ( TheStreet) -- A group of MF Global (MFGLQ.PK) clients are arguing in court documents that JPMorgan Chase (JPM) was using cheap tactics to side-step them in the bankruptcy recovery process, the New York Post reported.
Last week, JPMorgan, along with Bank of America (BAC) and other investment firms was appointed to the MF Global Creditor Panel.
The group of customers, led by James Koutalas, chief executive of a Chicago-based commodities trading firm, are taking issue with a lien and other protections offered to JPMorgan in exchange for a $8 million loan the bank extended to MF on the first day of its bankruptcy, according to the report. That would allow JPMorgan the right to some assets over other creditors.
Koutalas called the loan a "farce" and is requesting in a motion that customers be given priority over any assets recovered if client accounts were found to have been wrongfully commingled with company funds, the New York Post reported.The bankruptcy judge Martin Glenn has acknowledged that he doesn't normally grant special rights to a lone lender and is to re-evaluate the matter. Koutalas is also requesting that he be granted a seat in the committee. --Written by Shanthi Bharatwaj in New York
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