Refco enters support agreement for global plan of reorganization

By Caroline Salls

Pittsburgh, Sept. 18 - Refco, Inc. entered into a global plan support agreement with its official committee of unsecured creditors and the additional committee of unsecured creditors, Refco Capital Markets Ltd.'s Chapter 11 trustee, non-debtor affiliates, the Chapter 7 trustee for Refco, LLC, customers and creditors, according to an 8-K filing with the Securities and Exchange Commission.

Under the plan support agreement, all of the parties agreed not to propose or support any Chapter 11 plan other than the global plan.

In addition, the parties agreed not to object to the global plan or take any action that would delay confirmation or consummation of the global plan or approval of the disclosure statement.

Also, the Refco, LLC trustee will file objections to the 10 largest timely filed claims against Refco, LLC and any unliquidated timely filed claims against the company.

The Refco, LLC trustee will also file a stipulation allocating the proceeds of the sale of Refco's regulated commodity broker businesses if, by Sept. 14, the plan's co-proponents and the Refco, LLC trustee have agreed to the stipulation. The trustee will also file a motion to pay the amounts owed to Refco Capital LLC related to loans from Refco Capital LLC to Refco, LLC customers.

On Thursday, Refco filed a proposed plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York.

A hearing on approval of the disclosure statement is scheduled for Oct. 16.

On Sept. 7, Refco requested court approval of a settlement with its lenders that would pay off $642 million owed on a Refco Group Ltd., LLC credit agreement and save the company $6 million per month in interest accruing on secured lender claims as a key component of the global plan.

Refco said a crucial element of the global plan would be that sufficient funds are available to satisfy the claims of various constituencies.

To that end, the company said the global plan would call for pre-plan confirmation payments to a group of the company's secured lenders. Those would help ensure the availability of funds to pay other constituencies by cutting off more than $6 million per month of interest accruing on the secured lenders' claims for a Refco Group Ltd., LLC credit agreement; minimizing the incurrence of additional professional fees by the secured lenders, the committees and others, which have already been substantial; and resolving disputes over the use of cash collateral.

A hearing on approval of the lender settlement is scheduled for Sept. 27. Approval of the lender support agreement is a condition of the plan support agreement.

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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