On October 17, 2005, the Debtors filed voluntary petitions with the U.S. Bankruptcy Court for the Southern District of New York on behalf of its unregulated entities for reorganization relief under chapter 11 of the Bankruptcy Code.  Refco and its subsidiaries (together with Refco, the “Company”) are providers of execution and clearing services for exchange-traded derivatives and a major provider of prime brokerage services in the fixed income and foreign exchange markets.  The Company serves accounts from over twenty locations in over ten countries.  Its customers include corporations, government agencies, hedge funds, managed futures funds, pension funds, financial institutions, retail clients and professional traders. 

Refco Inc. announced October 18, 2005 that it entered into a Memorandum of Understanding (MOU) with a group of investors led by J.C. Flowers & Co. LLC for the sale of the Company's futures brokerage business conducted through Refco LLC, Refco Overseas Ltd., Refco Singapore Ltd. and certain related subsidiaries and other assets.  The Company filed a Form 8- K including the executed memorandum of understanding dated as of October 17, 2005.

On October 26, 2005 Refco announced that several additional parties had shown a strong and growing interest in the sale of its regulated subsidiaries, which were excluded from the company’s Chapter 11 filing.  In response the Court approved a deadline of Nov. 4 for the submission of bids for a sale auction on November 9, 2005 with final court approval of the sale slated for November 10, 2005.

On November 10, 2005, Refco announced that Man Financial Inc. ("Man") was the winning bidder at the auction conducted in accordance with the procedures established by the U.S. Bankruptcy Court.  Man’s winning bid was for substantially all of the assets of Refco’s regulated commodity futures businesses in the United States, London, Asia and Canada and consisted of $282 million in cash and approximately $41 million of assumed liabilities and other considerations valued for purposes of the auction.  Further, Man’s winning bid contemplates the bulk transfer of all Refco LLC's customer accounts to Man where they will continue to be serviced by Refco employees and brokers.  On November 11, 2005, Refco received approval from the U.S. Bankruptcy Court for the sale of substantially all of the assets of Refco’s regulated commodities futures business to Man Financial Inc.

On November 11, 2005 Refco signed a MOU with Forex Capital Markets LLC to sell certain of its retail foreign exchange assets.  The MOU provides for the sale of more than 15,000 retail client accounts of Refco FX Associates LLC (RefcoFX.com) and the 35% share of Forex Capital Markets LLC currently owned by Refco.

The Statement of Financial Affairs and the Schedules of Assets and Liabilities are to be filed with the U.S. Bankruptcy Court on December 30, 2005.  As of November 16, 2005 no Bar Date for the submission of claims has been set. 

Committee Seeks Approval Of Settlement With BAWAG

On June 5, 2006, the Committee filed a motion (the "Motion") in the Bankruptcy Court seeking approval of a proposed settlement and compromise of claims with BAWAG P.S.K. (the "Proposed Settlement") The Proposed Settlement was the product of round-the clock negotiations in three cities on two continents over little more than a month's time and involved unprecedented cooperation among estate representatives (the Committee, the Debtors, the RCM Trustee, and the Chapter 7 Trustee), governmental authorities (including the United States Attorney, the SEC, and Austrian governmental authorities), and private litigants.   The Proposed Settlement has yielded a result that resolves both civil and criminal litigation in the United States and averts a banking crisis in Austria.  The Proposed Settlement will:

• Provide, in absolute terms up to in excess of $1 billion in value for the Debtors and their estates;
• Of this total, one or more Debtors are guaranteed to receive more than $506 million within approximately a year's time plus up to more than $13 million in interest on the deferred component of this amount;
• One or more Debtors could also receive up to another $150 million if BAWAG or any of its subsidiaries is sold or recapitalized under certain circumstances within two years;
• BAWAG has agreed to give up claims of at least $480 million; and
• All of the foregoing was accomplished at minimal cost to the Debtors' estates in the 41 days following the Committee's filing of a counterclaim against BAWAG in the adversary proceeding brought by BAWAG against Refco Group Ltd., LLC, and other defendants.

You may view the Notice Summary of the Proposed Settlement or the Motion and attached Stipulation setting forth the terms of the Proposed Settlement below.

Open BAWAG Notice.pdf (19kb), 2053.pdf (4mb)