Reply #9: Refco in 4th Biggest Bankruptcy [View All]

[UpInArms]

http://www.themoscowtimes.com/stories/2005/10/20/260.html

NEW YORK -- Refco, the futures broker under investigation for hiding a $430 million debt, has filed for court protection from creditors in the fourth-largest U.S. bankruptcy.

Shares of Refco plunged, wiping out about $924 million in market value, after the company asked a U.S. bankruptcy court in Manhattan for permission to reorganize its $48.6 billion in liabilities. In the filing, New York-based Refco left out the units it plans to sell to a buyout group led by J.C. Flowers & Co. for $768 million.

Refco's collapse comes 10 weeks after it sold shares to the public for the first time, and may set up a contest between the Flowers group and the government of Dubai, whose offers to purchase the whole company have been rebuffed.

"It's a mess, an absolute mess," said Kevin Starke, who covers distressed and recently bankrupt companies for Weeden & Co. in Connecticut. "The one goal they have to have right away is providing the largest recovery for creditors. You see that Flowers is going to want to lowball them as much as possible. It sounds like he's almost buying the assets for nothing."

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