MSN MoneyCentral – A group of hedge funds that bet on a big payoff from investments they made in commodities brokerage Refco Inc. moved Wednesday to prevent the bankrupt company from paying off a$642 million loan.
The hedge funds, including JMB Capital Partners and Lonestar Capital Management LLC, hold more than 25 percent of Refco’s stock. Much of that stock was purchased after Refco tumbled into bankruptcy in October 2005, according to documents filed with the U.S. Bankruptcy Court in Manhattan.
On Wednesday the funds asked Judge Robert Drain to reject Refco’s plan to pay off the company’s secured lenders with proceeds obtained from the settlement of a big lawsuit. They said that the proposed payment “appears unnecessary,” and that Refco, in any case, shouldn’t be allowed to use the lawsuit-settlement proceeds for that purpose.
