Refco exits Chapter 11, to wind up businesses
Tuesday December 26, 5:28 pm ET
NEW YORK (Reuters) - Refco Inc. (Other OTC:RFXCQ.PK - News) on Tuesday said it has emerged from Chapter 11 protection from creditors, ending one of the most complex U.S. bankruptcy cases and allowing the company to wind up its businesses.
Refco, which was once a major futures and commodities broker, and 23 affiliates filed for court protection on October 17, 2005, a week after revealing that former chief executive Philip Bennett hid $430 million of debt, and two months after raising $583 million in an initial public offering of stock.
Bennett has pleaded innocent to fraud charges and is scheduled to stand trial in March.
The expected payouts represent a small fraction of the $16.8 billion that creditors had claimed they were owed. Robert Drain, a U.S. bankruptcy judge in Manhattan, approved Refco's reorganization plan on December 15.
Under the plan, secured lenders who were owed $717.7 million were paid in full, while bondholders are expected to receive 83.4 cents on the dollar, Refco said.
Customers of the Refco Capital Markets broker-dealer unit will receive 85.6 cents on the dollar, and the unit's unsecured creditors will receive 37.6 cents on the dollar, Refco said.
Unsecured creditors of other units will receive 23 cents to 37.6 cents on the dollar, the company said. A litigation trust set up to sue individuals who aided alleged fraud may also obtain recoveries for stockholders and some creditors.
Marc Kirschner, the court-appointed trustee for Refco Capital Markets, expects to make "substantial" payouts to the unit's creditors by year end, Refco said.
Refco shares closed Tuesday down 5 cents at 30 cents in Pink Sheets trading.
