NEW YORK (CNNMoney) -- Jon Corzine has resigned as chief executive officer of bankrupt MF Global, and the firm says he will not be taking a severance package on his way out.
"I have voluntarily offered my resignation to the board of directors of MF Global," Corzine said in a statement Friday. "This was a difficult decision, but one that I believe is best for the firm and its stakeholders." (MF Global: Sorting through the debacle.)
Corzine has also retained a criminal defense lawyer, Andrew Levander, according to source familiar with the matter. Levander has represented high profile white collar clients like John Thain, former CEO of Merrill Lynch, as well as investment managers in Bernard Madoff Ponzi scandal and directors for the now-defunct Lehman Brothers.
Corzine was technically eligible to receive a $12 million compensation package, but he was unlikely to get it, given the company's bankruptcy. In order to get any of his severance money he would have to get in line behind creditors owed more than $2 billion.
JPMorgan Chase (JPM, Fortune 500) is the most prominent creditor, with more than $1.2 billion in bonds, followed by Deutsche Bank (DB), with about $1 billion.
On Friday MF Global confirmed that Corzine would leave without a golden parachute. "Mr. Corzine has confirmed that he will not seek severance payments in connection with his resignation," the firm said.
Corzine, a former New Jersey governor and senator and former CEO at Goldman Sachs (GS, Fortune 500), is leaving as the company crumbles under the growing scandal.
"I feel great sadness for what has transpired at MF Global and the impact it has had on the firm's clients, employees and many others," said Corzine. "I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm's assets."
MF Global (MFGLQ), a trader in commodities and derivatives, began to implode after it disclosed $6.3 billion in exposure to troubled sovereign debt from weak European countries. The company was forced to take write-offs as part of last week's deal to resolve the debt crisis in Europe sparking an investor panic.
As the firm's crisis intensified last week, Corzine tried to broker a last-ditch weekend deal to sell it to Interactive Brokers (IBKR) but instead the firm was forced to file for Chapter 11 bankruptcy protection on Monday, after the deal fell through because accounting "deficiencies" were unearthed.
Federal regulators said this week that $633 million was missing from MF Global's books. The trustee in the bankruptcy case is seeking authorization to subpoena executives to find out how the customer funds could have gone missing.
The CME Group (CME), operator of the nation's largest commodity exchanges, alleges that MF Global broke government and CME rules requiring it to keep its customers' funds separate from its own assets.
Mike Fitzpatrick, a former oil trader at MF Global and editor-in-chief of the Energy Overview at the Institute for Energy Research, said he's surprised by the allegations.
"As all these allegations are coming out, I'm nothing less than totally flabbergasted," said Fitzpatrick, who worked at the brokerage from 2007 to 2010.
He said that he worked with Corzine for a few months after he became CEO on March 23, 2010 and he doesn't see Corzine as being capable of financial malfeasance.
"[Corzine] was really friendly towards me and I guess I was one of the people he spoke to in proprietary trading," said Fitzpatrick. "He's got a lot of arrogance. He's very convinced of his own opinion. But I think the man's got integrity."
The FBI and federal prosecutors are investigating the situation, according to a source close to the probe.
A federal bankruptcy court judge in New York approved a lifeline of $8 million to keep MF Global afloat for a few days while it goes through the bankruptcy process on Tuesday. That lifeline is expected to keep the lights on and people employed until Nov. 14, when the court will take up the issue again. 
