Updated from 5:39 a.m. EDT

NEW YORK ( TheStreet) -- MF Global ( MF) was close to a deal to file for Chapter 11 bankruptcy protection as soon as Monday and sell assets to Interactive Brokers Group ( IBKR), The Wall Street Journal reported, citing a person familiar with the matter.

The tentative agreement, reached over the weekend, could end the tenure for Jon Corzine, the former governor of New Jersey, as CEO at MF Global, the Journal said. Corzine joined MF Global last year.

Under the tentative plan, MF Global's holding company would file for bankruptcy protection, the person familiar with the matter told the newspaper. Interactive Brokers would likely then make an initial bid of about $1 billion during a court-supervised auction.

None of MF Global's regulated entities would seek bankruptcy protection, the person said.

There is a probability the deal gets done, but the deal is "very far from a done deal," the person said, the Journal reported.

On Monday, the Federal Reserve Bank of New York, in a statement, said it informed MF Global "that it has been suspended from conducting new business with the New York Fed.

"This suspension will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities set out in the New York Fed's policy, "Administration of Relationships with Primary Dealers," or until the New York Fed decides to terminate MF Global's status as a primary dealer."

Investors have been dumping shares of MF Global because of worries about the firm's exposure to European government debt.

Corzine made big bets on sovereign bonds issued by European countries, according to people familiar with the situation. Those trades, which ballooned more than $6 billion, knocked MF Global's debt ratings to junk, according to the Journal.

-- Written by Joseph Woelfel

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