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Refco unsecured creditors object to trustee request in light of CEO appointment
By Caroline Salls
Pittsburgh, Jan. 4 - Refco, Inc.'s official committee of unsecured creditors objected to the U.S. Trustee's motion to appoint a Chapter 11 trustee to investigate claims of pre-bankruptcy management misconduct and to maximize recoveries for the estate, saying the motion is premature and the recent appointment of a chief executive officer renders the trustee request moot.
According to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York, the company appointed Harrison J. Goldin as CEO on Dec. 19, and the committee supports the appointment of Goldin.
The committee said the U.S. Trustee has failed to prove that displacing Goldin with a Chapter 11 trustee would benefit any party in the case.
To the contrary, the committee said Goldin is an independent fiduciary uniquely qualified to maximize the value of the company's estates for the benefit of creditors, customers and parties in interest and has extensive experience investigating and prosecuting sophisticated cases of management fraud in various industries.
In addition, the committee said the U.S. Trustee cannot contend that Goldin is not a well-qualified fiduciary because the trustee itself has appointed Goldin to be the fiduciary in other cases.
The committee also said that the court should wait to rule on the appointment of a trustee until after it rules on whether to convert Refco Capital Markets, Inc.'s case to a Chapter 7 stockbroker liquidation case because the conversion would prompt the displacement of any trustee appointed in the case.
The hearing on converting Refco Capital Markets' case is scheduled for Jan. 31. The hearing on the appointment of the trustee is scheduled for Jan. 10.
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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