Refco unsecured creditors call U.S. Trustee's motion to reconsider trustee denial 'baseless'

By Caroline Salls

Pittsburgh, Feb. 7 - Refco, Inc.'s official committee of unsecured creditors objected to the U.S. Trustee's motion to reconsider the bankruptcy court's order denying appointment of a Chapter 11 trustee, calling the motion "baseless," according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the objection, the U.S. Trustee's motion does not prove that there was an error of law in the original ruling, as required by bankruptcy law.

"Instead, the U.S. Trustee is simply unhappy with the court's conclusion and is trying to obtain a different result," the committee said in the objection.

On Jan. 27, the U.S. Trustee requested the appointment of an examiner to investigate allegations of fraud and mismanagement in the company's Chapter 11 case after the Chapter 11 trustee request was denied on Jan. 11 with the condition that the current members of the board of directors are removed and replaced with at least one independent director.

A hearing on reconsideration of the trustee motion and appointment of an examiner is scheduled for Feb. 14.

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

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