Refco Raring To Return Cash To Claimants

After all the legal wrangling and bickering, the administrator of Refco Capital Markets is eager to start returning some funds to customers and creditors alike before the end of the year. The gesture certainly is in the holiday spirit, but it is far from clear who will get a check and how much. The court-appointed administrator, Marc Kirschner, in his filing with U.S. Bankruptcy Court in New York, has stated he was looking to "establish a procedure, albeit somewhat complex, to achieve expeditiously as large a distribution possible to as many of the RCM constituents as possible." That will be some feat, given there is $1.3 billion out of a total $2.4 billion in assets available to hand out against $9.5 billion in claims by some 2,300 Refco customers and creditors. Kirschner has proposed paying 75% of an undisputed claim now, its status depending on whether the claimant has reached an agreement on the amount, and then work things out later. In cases where the claims have "absolutely no correlation to RCM’s books and records or other available information," those claimants will be out of luck, their cases declared invalid. That should rid RCM of some of the force of 2,300 claimants clamoring for cash. The Refco unit is also planning to try to dismiss a $532 million claim by PlusFunds Group, founded by a former Refco executive. PlusFunds, which has gone out of business, claimed the bankruptcy caused its collapse. Not so, responded Refco, which in papers filed last week pointed to the hedge fund operator as the "catalyst" for its collapse, noting that "wounds were...self-inflicted and cannot be imputed to the debtors." Meanwhile, Gerald Sherer, Refco’s former chief financial officer, is demanding the collapsed firm pay him $10.6 million for his work in reaching a $506 million settlement with Bawag, the Austrian bank that has been implicated in the Refco meltdown, as it allegedly had lent former Refco CEO Phillip Bennett hundreds of millions to cover up losses. The figure sought includes severance pay and bonuses Sherer says he is entitled to as part of his employment contract.