The Chapter 11 bankruptcy of Refco and its subsidiaries became effective yesterday, more than a year after the firm filed for protection from its creditors.
The Chapter 11 plan had been confirmed by the US Bankruptcy Court in New York on 15 December. The effective date of the plan now permits the companies to complete an expeditious orderly wind-up of their businesses.
The wind-up plan is premised on a series of interdependent settlements and compromises in one of the most complex bankruptcy cases in history. Under the terms of the Plan, secured lenders who were owed $717.7 million were paid in full in cash prior to confirmation of the plan; bondholders are expected to receive 83.4 cents on the dollar for their claims; Refco Capital Markets’ securities customers are expected to receive approximately 85.6 cents on the dollar for their claims, and Refco Capital Markets’ general unsecured creditors are expected to receive approximately 37.6 cents on the dollar for their claims. General unsecured creditors at the other Refco companies are expected to receive between 23 and 37.5 cents on the dollar for their claims. In addition, shareholders and certain creditors of the company will have the opportunity to participate in recoveries obtained by both the Litigation Trust and Private Actions Trust, which will hold certain litigation claims.
The effectiveness of the plan has enabled Marc S. Kirschner, the Chapter 11 Trustee of Refco Capital Markets, Ltd., to make substantial interim distributions to creditors of Refco Capital Markets by year-end. The other Refco companies will be wound up by RJM, LLC, operated by Robert J. Manzo, and assisted by Capstone Advisory Group, LLC.
Refco and 23 of its affiliates filed for bankruptcy protection with the US Bankruptcy Court for the Southern District of New York on 17 October 2005.