Before Collapse, MF Global Had Emergency Plan Sifting through the MF Global's "break the glass" plan is a bit like retracing the failed escape route in a charred building. The plan was hatched by executives at the brokerage firm in early October as a road map to survival in the worst-case scenario: What if ratings agencies downgraded MF Global to junk status? In such a case, the company estimated, the stock price would plummet and liquidity demands would mount, but "we remain solvent - are able to manage liquidity through stress period as we reposition our business and stabilize our financing lines." With the benefit of hindsight, the plan, which was cited on Thursday at a Congressional hearing about the collapse of MF Global, now seems hollow. Though the public remains in the dark about what happened with MF Global's cash and liquidity after the downgrades, it is clear the plan did not work. The plan goes into great detail about the potential implications of a ratings cut to the company's ability to finance itself. Chief among the demands would be paying for its corporate paper (estimated to use $1 billion to $1.5 billion of cash) and margin calls from the clearinghouses, where many of the firm's risky European sovereign debt exposure was held ($200 million to $250 million). A flood of daily cash outflows in such a scenario would leave the firm out of money by the end of the fifth day. But those are the estimates without "mitigants of cash," or the ability to raise money through loans and by selling off assets. When taking those into account, the firm's futures business could withstand up to two months of market battering. The firm's British operation, according to the plan, would have sufficient cash on hand to weather the storm without "mitigants." In parts, the plan seems to have been put together in haste - there are occasional typos and the language and formatting has the feel of something unfinished. What is clear, however, is that MF Global knew selling off huge amounts of repurchase and reverse repurchase agreements, as well as its European sovereign debt positions, would be needed to reduce the size of the balance sheets and meet liquidity needs. The plan notes in more than one place that protecting customer accounts and calculating segregated assets each day is paramount. Now, it is clear that as early as Oct. 27, four days before the company filed for bankruptcy, MF Global dipped into those segregated customer accounts to pay off its own bills. The estimated shortfall of customer segregated money is roughly $1.2 billion. While investigators have traced where nearly all that money wound up, retrieving it will be a significant problem. The money went to pay at least some valid bills that MF Global owed. It also was used to pay securities customers who moved to close their accounts around the firm's collapse. The company planned for its treasury, finance, risk and operations teams to be positioned at the center of the downgrade storm, which has certainly been the case in the aftermath of the firm's demise. Congress has called on the firm's chief financial officer, chief operating officer and former and current chief risk officers to testify. A name that is repeated regularly when it comes to the missing money is Edith O'Brien, a treasury official in the firm's Chicago offices, where the cash went missing. Below is a copy of the plan: MF Global's "break the glass" document