Refco Trustee Looks to Distribute $450M
Monday April 2, 6:06 pm ET
Refco Unit's Trustee Looks to Distribute Additional $450M
WASHINGTON (AP) -- The court-appointed administrator of a key subsidiary of Refco Inc. said he'll have about $450 million left to distribute to the brokerage's customers and creditors.
Marc Kirschner, the administrator of Refco Capital Markets Ltd., said in papers filed Friday with the U.S. Bankruptcy Court in Manhattan, that the unit, known as RCM, had $920 million in cash and securities to distribute to customers.
After the company makes its final payments to bankruptcy professionals, Kirschner said RCM will have remaining assets of more than $450 million.
Bankruptcy Judge Robert D. Drain has already given Kirschner the green light to dole out some $1.9 billion to clients of RCM, a Bermuda-based unit that was a conduit for many of the allegedly fraudulent transactions attributed to former Refco chief executive Phillip Bennett.
Since taking on the role as RCM's trustee in April of last year, Kirschner has paid out $56.54 million to the team of bankruptcy professionals who worked on RCM's Chapter 11 case.
He paid $84.4 million to JPMorgan Chase as part of a deal to repay the outstanding balance of a $201 million loan the unit obtained from the bank just days before Refco crashed into bankruptcy in October 2005.
Kirschner has also paid himself about $1 million for his work on RCM's bankruptcy case.
RCM had about $2.5 billion in cash and securities in December, when Drain confirmed Refco's Chapter 11 plan, according to court papers.
Refco got court approval of its Chapter 11 liquidation plan in December. A cornerstone of the plan was the brokerage's deal with dozens of Refco Capital Markets customers who sued the brokerage after it collapsed amid an accounting scandal in October 2005.
Under the Chapter 11 plan, securities customers of Refco Capital Markets, who were owed about $2.7 billion, were to be paid about 85.6 cents on the dollar. RCM's unsecured creditors were to be paid 37.6 cents on the dollar, while Refco's other unsecured creditors were to receive between 23 cents and 37.5 cents on the on the dollar.
RCM's securities' customers have been paid about 61 cents on the dollar and foreign exchange creditors have received about 21 cents, according to court papers.
Refco, which is winding down its remaining operations, exited Chapter 11 in December. Kirschner immediately began disbursing more than $1 billion to creditors.
Refco, once one of the country's biggest commodity brokerages, collapsed amid allegations that its chief executive hid $430 million in bad debt. The executive, Phillip Bennett, has pleaded not guilty to fraud charges.