A federal judge paved the way for MF Global Holdings Ltd.’s bankruptcy proceedings on Wednesday. He rejected PricewaterhouseCoopers’ bid to force the bankruptcy administrator to stick to what PwC calls the original theory of who was to blame in the trial stemming from the 2011 collapse of commodities brokerage MF Global Holdings.

U.S. District Judge Victor Marrero in Manhattan, who is overseeing MF Global’s $3 billion suit against PwC, rejected the brokerage’s auditor’s request for a mistrial, saying that PwC’s lawyers can challenge MF Global’s arguments in court over the rest of what is expected to be a five-week trial. “The weeks remaining should afford PwC sufficient time to respond to any shift it perceives in the Plan Administrator’s theory,” he said.

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“PwC had sufficient notice prior to the time it filed this motion to conclude that the Plan Administrator alleges that PwC’s advice caused a crisis of confidence in MF Global’s financial statements,” the judge wrote.

The accounting firm said that the MF Global administrator abandoned the initial theory that accuses PwC of dispensing bad accounting advice regarding how MF Global should handle foreign investments made on highly leveraged European instruments that generated short-term income but saddled it with significant future liabilities.

AS such, PriceWaterhouseCoopers filed a mistrial request last Sunday saying that MF Global had shifted its original theory of causation to a more general one that accuses PwC’s various accounting mistakes of causing confusion and loss of confidence in MF Global’s financial statements. That confusion extended to analysts at the bond-rating houses, customers, investors and lenders, which was only discovered on the eve of MF Global’s failure.

Negligence and malpractice led to the collapse

The administrator, who is seeking money for the MF Global creditors, said there’s nothing new about the causation theory and that PwC is just trying to hide facts proving that “its egregious auditing failures destroyed trust and confidence in MF Global’s financial position, which caused its sudden collapse and damages.”

The bankruptcy plan administrators of the brokerage are suing PwC, the world’s second-biggest professional services firm and former auditor of MF Global, claiming that its negligence and malpractice led to the New York brokerage’s collapse in 2011.

More specifically, PwC allegedly advised MF Global to account for repurchase-to-maturity transactions as if they were sales and immediately book the revenues up to 21 months before they actually rolled in. In fact, the deals were not sales and the company shouldn’t have processed the revenues. MF Global’s administrator also faults PwC’s advice on some deferred tax assets, on which the company took a $119 million write-off just six days before going bust.

Meanwhile, PwC’s lawyers argued in in Manhattan Federal Court that the company’s officers, including Corzine, were behind the scheme and that it merely confirmed to them that the accounting was legal. PricewaterhouseCoopers faces as much as $3 billion in damages if found guilty.