Refco granted court approval of $127.46 million intercompany claims settlement

By Caroline Salls

Pittsburgh, Aug. 10 - Refco Inc. obtained court approval of a settlement in connection with the collection of $127.46 million in intercompany claims against Refco Securities, LLC, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The stipulation provides a resolution of intercompany obligations between Refco Capital, LLC and Refco Securities and sets up payment over time.

According to the motion, the stipulation allows Refco Capital to receive full payment on its claim although Refco Securities lacks available liquid assets sufficient to pay it.

Refco Securities will pay 80% or $101.97 million of the claim within two days and the remainder will be paid by Dec. 22, plus 4.98% interest accruing from April 30.

The payments will be placed in a segregated account. After the settlement becomes final and no longer subject to review, 60% of the payments will be held in the account until disputes over ownership of the debt are resolved. Refco Capital will be free to use the remaining 40% of the payment.

The claim arose from a series of transactions between Refco Capital and Refco Securities before Refco filed for bankruptcy, and, to avoid potential litigation, Refco Capital is willing to accept full payment over time.

Refco Securities claims Refco Capital owes it about $92 million, but that claim is still under review.

Refco, a New York-based commodities brokerage company, filed for bankruptcy on Oct. 17, 2005. Its Chapter 11 case number is 05-60006.

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