Refco obtains court OK of $705 million settlement with secured creditors

By Jennifer Lanning Drey

Eugene, Ore., Sept. 27 - Refco Group Ltd., LLC obtained court approval of a $705 million settlement with its secured creditors, according to a company news release.

The creditors include a group of banks led by Banc of America Securities as agent, and the agreement settles all secured claims against Refco, according to the release.

Under the settlement, Refco's secured lenders will receive payment in full of principal plus interest at the contractual rate through the payment date. The lenders have agreed to forego payment of default interest.

In addition, Refco, its lenders and certain third parties will exchange mutual releases.

The approval was a necessary step toward effecting the global settlement, obtaining approval of the reorganization plan and making distributions to unsecured creditors, David Pauker, Refco's chief restructuring officer, said in the release.

Refco also said the agreement is in the best interest of the Refco estates and their creditors because it limits "potentially substantial secured claims for additional interest, fees and indemnities."

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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