Refco equity holders object to exclusivity extension

By Caroline Salls

Pittsburgh, Sept. 7 - Refco, Inc.'s ad hoc committee of equity security holders objected to the company's request for an extension to its exclusive periods to file a plan of reorganization and solicit votes on the plan, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said it objected to any exclusivity extension for Refco or New Refco Group Ltd. LLC.

According to the objection, "extending exclusivity will hold parent equity hostage to a process that seems geared at forcing Refco and New Refco to surrender to the global plan apparently being negotiated without any input from the ad hoc equity committee, the only non-conflicted party with an interest in Refco and New Refco."

The committee said Refco is effectively operating without a fiduciary, and "management is hopelessly conflicted because it represents the interests of other debt-laden estates, which are directly adverse to those of the two parent estates."

Rather than extending exclusivity, the committee said cause exists to reduce the exclusive periods "so that parent equity may propose a Chapter 11 plan that would appoint a much-needed sole fiduciary for Refco and New Refco."

Refco, a New York-based commodities brokerage company, filed for bankruptcy on Oct. 17, 2005. Its Chapter 11 case number is 05-60006.

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