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Bankrupt hedge fund facing $90 million settlement

Last month, a United States District Judge approved a settlement between a hedge fund and investors who claimed losses as a consequence of a trader based in Tennessee losing $141.5 million on wheat futures contracts in 2008. The judge's ruling clears the way for a $90 million settlement reached in January by investors and the hedge fund.

However, the hedge fund filed for bankruptcy in October. It listed $39.7 billion in debts and $41 billion in assets in its bankruptcy filing. The hedge fund was heavily invested in the government bonds of several European nations and it suffered considerable losses when the debt crisis took hold of the continent.

The trouble for the hedge fund began in 2009. It seems the hedge fund failed to check in on one of its traders based in Memphis, a man whose speculation on wheat futures contracts cost the hedge fund over $100 million in losses. The man involved was charged with wire fraud and violating the U.S. commodity laws.

In the wake of the District Court ruling approving the settlement, a bankruptcy judge will now decide if the bankrupt company will pay out cash for its settlement with investors.

When a company is forced into bankruptcy, the implications of that action can be difficult to manage. However, as many Tennessee business owners know, a struggling economy can make running a business even tougher. Bankruptcy can offer a viable solution to mounting debt. Business owners that are struggling financially may find it beneficial to seek the advice of an experienced bankruptcy attorney.

Source: The Commercial Appeal, "MF Global trader in Memphis lost big on wheat," Ted Evanoff, Nov. 22, 2011

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