MF Global "Corporate Personhood" Case: Motion for Appeal Filed

NEW YORK, March 23, 2012 /PRNewswire/ -- A motion for leave to appeal a Federal Court order in the current MF Global "Corporate Personhood" case was filed on Tuesday by former MF Global customer, Adam Furgatch of Hawaii.  Mr. Furgatch's originally filed motion, which raised the issue of "corporate personhood" in the ongoing MF Global bankruptcy case, was denied by Judge Martin Glenn after being heard in Federal Bankruptcy Court on March 6th. 

Mr. Furgatch, through his attorney, indicated that an appeal is warranted because there are similarities between his motion and the high-profile Kiobel v. Shell Oil corporate personhood case, the Nigerian human rights violations case currently being considered by the Supreme Court.  The Kiobel case seeks to hold corporations responsible for their actions in the same manner that a human person would be held responsible for his or her own criminal actions. 

A prominent legal expert on the corporate personhood issue, Carl Mayer of New York, in response to a request for comment on MF Global and the Furgatch Motion, wrote that "the Shell Oil case is similar to the Furgatch case in that Shell Oil turns on the question of whether corporations can be considered 'persons' under the Alien Tort Claim Act, while the Furgatch case turns on the question of whether corporations can be considered 'persons' under the Bankruptcy Code.  The fact that the Supreme Court heard the Shell Oil case and then asked for further argument on the issue, shows how important and relevant the issue of corporate personhood is."

The Furgatch Motion asserts that because the U.S. Supreme Court has ruled that corporations are to be treated as "persons", then the "parent" corporate person, MF Global Holdings, by definition, must have a "child" corporate person, MF Global, Inc., the subsidiary brokerage whose 35,000 customers are still missing at least $1.6 billion in what was universally believed to be secured, segregated funds.  The motion then cites specific statutes in the Bankruptcy Code that mandate that a child's support claims shall have super-priority status over all other unsecured creditors, including financial institutions such as JP Morgan Chase Bank.

"In essence, in human terms, the MF Global parent recklessly gambled away the family's money and then looted the brokerage child's trust fund and piggy bank to support a destructive gambling habit," said Mr. Furgatch in a recent interview.  "The child is still missing 20% of its corporate body and is effectively maimed -- by its own parent, no less -- and needs to be made whole again.  The remedy is simple and readily available with the restitution of funds, and now the parent should not be allowed to avoid its parental responsibilities in bankruptcy.  A human being would never get away with such irresponsible behavior."

Mr. Furgatch added, "This issue of corporate personhood and how it affects human beings is fundamental and critical for everyone to understand.  And the issue is not going away," he emphasized.  "We will make sure that these important questions get answered to the satisfaction of the large and growing number of Americans who are genuinely concerned about unchecked corporate power."

The Court order denying the Furgatch Motion stated that applicable Bankruptcy Code statutes and legal precedents consider that some parts of the Code are expressly reserved for corporations and some parts for individual human persons.  Thus, the Court said, the motion's attempts to treat corporations the same as individuals are unfounded.

Mr. Furgatch responded, "No matter how the Court may have ruled so far, the Fourteenth Amendment constitutional issue cannot be ignored.  If the MF Global corporations are defined as 'persons' in the Bankruptcy Code, then the Fourteenth Amendment guarantees equal legal protection and no discrimination among all types of 'persons,' be they a black, white, female, male, or corporate person, as defined.  The bankruptcy laws must apply equally to corporate persons and individual persons, or perhaps the existing laws are unconstitutional and corporations are not really persons after all.  Imagine that."

The Furgatch Motion also points out that in the wake of Supreme Court decisions such as Citizens United, which effectively grant human rights and privileges to corporations, the concept of "personhood" has become significantly blurred and all Federal statutes written prior to 2010 may be subject to new interpretations of corporate rights and responsibilities. 

Paraphrasing a popular criticism of corporate personhood, Mr. Furgatch stated, "We'll believe that corporations are persons when they are made to pay child support or are prosecuted for child neglect."

Procedurally, Mr. Furgatch's attorney also filed with the Court a notice of appeal, concurrently with the motion for leave to appeal.

Mr. Furgatch, a fresh, creative voice in financial and political commentary, has published copies of all legal filings and additional background information concerning this legal action on his website: www.AdamFurgatch.com

The Furgatch Motion was brought in the case of MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Referenced Cases cited above:  1) Kiobel v. Royal Dutch Petroleum (Shell Oil), U.S. Supreme Court Docket # 10-1491 and 2) Citizens United v. Federal Election Commission, 558 U.S. 08-205 (2010).

Contact:  Lia Martin: 310-464-6225
[email protected]

SOURCE Adam Furgatch