Refco Inc. creditors are resisting attempts by Thomas Lee to get the collapsed future broker’s insurer to pick up the tab for fighting lawsuits filed against him over Refco. Lee and other members of Thomas H. Lee Partners, LBO Wire reports, are defendants in 14 proposed investor class actions brought against them for the time they were members of Refco’s board of directors. U.S. Specialty Insurance is willing to pay up to $10 million in legal expenses, but the creditors are balking, saying “there are substantial questions to be answered concerning the structures, costs and effects of the investment in Refco by Thomas H. Lee Partners in June of 2004 and Refco’s IPO in August of 2005.” The creditor’s objection basically focuses on such defense payments to former CEO Philip Bennett, but Lee fears it will trickle down to former board members, such as himself. In papers filed in U.S. Bankruptcy Court in New York earlier this week, Lee says, “There is no basis whatsoever to deny the respondents access to the insurance that was put in place for the exact purpose of recovering the respondents’ defense costs.” A hearing is scheduled for today.
