It now has been a year since Phillip Bennett, Refco Inc. CEO, was discovered hiding more than half a billion dollars in bad debt, crashing the giant brokerage firm into scandal and landing it in bankruptcy court. And while many customers and creditors still don’t have their money back, some are inching towards resolution.
Under the terms of a global settlement with Refco Capital Management (RCM), Beeland Management Company LLC, manager of the Rogers Raw Materials Fund L.P. and the Rogers International Raw Materials Fund L.P., will be treated as a securities customers and will receive more than $305 million, 84% of the $364 million transferred to Refco in late September 2005, just weeks before the disaster. Beeland CEO Walter “Tom” Price III says he expects the first 70% distribution by the end of this year and the remainder during the first quarter of 2007.
Under a separate settlement with Refco LLC, Beeland will recover an additional $30 million. The court approved the settlement on Oct. 11, and Price says the money should be distributed within 30 days. The settlements leave open the opportunity to recover additional funds from third parties and between the two cases; Beeland could recover more than 96% of the funds tied up in the bankruptcy.
“We are trying to get as much of this behind us as possible,” Price says. “It’s somewhat in the hands of the trustees. We’ve made our appeals. We’ve done the math and we think we are OK,” adding that bankruptcy cases typically take longer than a year and that he is pleased with Beeland’s recovery.
Refco Inc. will pay more than $650 million to lenders who backed the company’s initial public offering; those firms include Bank of America, Credit Suisse and Goldman Sachs.
Also, the constructive trust case brought by retail customers of Refco FX (RFX) is scheduled for trial beginning Dec. 12. More than $10 million has been earmarked for potential recovery by 300 RFX retail traders, if they can prove customer funds were kept in individually identifiable bank accounts.
