Forbes – A group of hedge funds that fought to boost payments to stockholders in Refco Inc.’s bankruptcy proceedings won the right to collect $1.2 million in legal fees and expenses from the company,marking a final victory in their bid for a payoff from their Refco shares.
Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan on Dec. 29 approved the reimbursement to Refco’s ad hoc equity committee. The committee consists of King Street Capital Management LLC, QVT Financial LP, JMB Capital Partners LP, Mason Capital Management, Smith Management LLC and Triage Management LLC, which collectively owned about 30 percent of the company’s stock.
The reimbursement includes $1.15 million in professional fees, $132,032 in expert-witness expenses and assorted other fees accrued during a protracted court battle during which the hedge funds won the right to 3 percent to 15 percent of two trusts in the case. Most of the hedge funds bought shares after Refco, a former commodity brokerage, tumbled into bankruptcy in October 2005.
The reimbursement comes as Refco’s bankruptcy is winding down. Creditors recently won court approval to receive a fraction of the $16.8 billion they were owed under a Chapter 11 plan approved in late December. According to court documents, the company has $3.65 billion in cash that could be available for distribution to creditors.
Refco initially entered bankruptcy amid allegations that its chief executive Phillip Bennett, who has pleaded not guilty to fraud charges, had hidden $430 million in bad debt. The company exited bankruptcy proceedings late last month under a plan that calls for it to wind down its operations.
