Associated Press
Refco: Unregulated Accounts to Stay Frozen
10.28.2005, 04:22 PM
Lawyers for bankrupt Refco Inc. said Friday that customers holding accounts at its unregulated unit are creditors and that those accounts will continue to be frozen.
The accounts are not customer property, said Refco attorney J. Gregory Milmoe, a lawyer with the firm of Skadden, Arps, Slate, Meagher & Flom LLP. That means the accountholders will join other Refco creditors in trying to get the money back.
Milmoe spoke at a meeting where unsecured Refco creditors formed a committee to represent their interests during the bankruptcy proceedings.
Those sitting on the committee are representatives of Wells Fargo & Co., VR Capital Group, Cargill Inc., Premier Bank International, Fimex, The Everest Fund and Mark Wood Investments.
One of the committee's first tasks will be to chose advisers and legal representation for the creditors.
Refco, a provider of trade execution, clearing and foreign-exchange brokerage services, filed for Chapter 11 protection two weeks ago with the U.S. Bankruptcy Court in Manhattan.
Its filing came on the heels of the disclosure that its then-chairman and CEO, Phillip Bennett, had hidden $430 million in bad debt.
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Refco lawyer fires salvo in accounts battle
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By James Politi in New York
Updated: 12:40 a.m. ET Oct. 29, 2005
A lawyer representing Refco, the collapsed US brokerage, on Friday said customers holding accounts in the company's unregulated capital markets arm could not reclaim them as their property.
With the statement, made at a meeting of creditors in Manhattan, Refco's lawyer fired an early salvo in what is expected to be a key battle in the bankruptcy proceedings.
If the bankruptcy court supports Refco's belief that customer accounts are owned by the company rather than its clients, the amount of money that creditors can expect to receive will be significantly reduced.
"It is Skadden Arps' preliminary view that these accounts are not customer property and therefore people who have given us money in the unregulated business are creditors,'' said Gregory Milmoe, Refco's lawyer from Skadden Arps, the New York law firm. He added: "If it is ultimately determined our preliminary view is wrong, we will be able to trace and identify those accounts.''
A number of creditors present at the meeting expressed concern with the position taken by Mr Milmoe. "It is very troubling because if it's not customer property then we're sharing a distribution and we're not receiving full recovery,'' said Rick Antonoff, a lawyer with Pillsbury Winthrop Shaw Pittman.
The debate over customer accounts erupted as the US Trustee's office, which manages bankruptcies for the US Justice Department, announced the composition of the creditors' committee.
Included in the committee are VR Global Partners, a Russian hedge fund that was listed this week as the largest creditor, with an exposure of $620m; Wells Fargo, the California-based bank, Premier Bank International, Cargill , Markwood Investments, Everest Fund , and PheMex. Bawag, the Austrian bank that is among the top five creditors of Refco, was not included in the committee.
Most participants in yesterday's meeting insisted that the most important thing Refco could do at the moment was to successfully complete the sale of the regulated futures business, which fetch up to $850m.
This week, Refco set a deadline of November 4 for bids to be tabled, and November 9 as the date for the auction of the unit. Likely bidders include Interactive Brokers Group; a consortium including the Dubai Investment Group and the Yucaipa Companies; and a group including Merrill Lynch, Warburg Pincus, and Susquehanna.
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If the bankruptcy court supports Refco's belief that customer accounts are owned by the company rather than its clients, the amount of money that creditors can expect to receive will be significantly reduced.
:mrgreen:
律师的嘴真是大,一口吃了多少钱 |