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Refco sells some assets to Man Group

Refco Inc., the commodities and futures broker, Saturday said it has sold its U.S. regulated commodity futures business to a unit of Man Group Plc, the world’s largest publicly traded hedge fund company.
/ Source: Reuters

Refco Inc., the commodities and futures broker, Saturday said it has sold its U.S. regulated commodity futures business to a unit of Man Group Plc, the world’s largest publicly traded hedge fund company.

The sale to Man Financial Inc. came after U.S. Bankruptcy Judge Robert Drain Friday authorized Refco to liquidate some assets. Earlier Friday, the company’s Refco LLC unit filed for Chapter 7 bankruptcy protection to facilitate the sale to Man, according to the unit’s bankruptcy petition.

“Good and sufficient reasons for approval of the agreement and the sale have been articulated,” Drain wrote in his order. The sale is “in the best interest of the Chapter 7 debtor’s estate and its creditors and customers,” he added.

Refco Inc. had filed for Chapter 11 bankruptcy protection on Oct. 17, one week after ousting its chief executive, Phillip Bennett, and accusing him of hiding $430 million of debt. Bennett pleaded not guilty on Nov. 18 to eight counts of conspiracy, fraud and other charges.

Generally, in Chapter 7 a court-appointed trustee oversees the liquidation of assets, while in Chapter 11 a company keeps control of its business, but develops a plan to reorganize it and pay creditors. Refco has in court documents listed $16.8 billion of liabilities.

Man outbid four others for the Refco assets in a 21-hour auction that ended Nov. 10. It agreed to pay $282 million in cash for the accounts and staff of Refco’s regulated futures brokerage in the United States, Great Britain, Canada and Asia.

On Thursday, Man said investment firm Marathon Asset Management will acquire Refco’s London business because of an overlap in its operations.