November 09, 2005
Moscow based hedge fund will contest Refco bankruptcy
Refco, the largest independent U.S. futures brokerage filed for bankruptcy in October. It’s crash really started off on 10th October when Philip Bennett, the company’s Chief Executive was suspended by the company. He was subsequently arrested and charged with securities fraud amounting to $430 million. He had allegedly hidden away the mentioned amount debt to the company.
This initiated a cascade effect which got in a lot of people in it’s fold. Refco's bankruptcy filing has included Moscow-based hedge fund VR Group as its major creditor. Its total exposure is currently valued at $472 million. The other creditors named in the list include Austrian bank BAWAG and U.S. Wells Fargo. This information was revealed at the New York Southern District bankruptcy court show.
Further to the filing, VR Group has taken strong objection to their name being included in the creditors list. The group claims that the money was being held in custody by Refco on VR's behalf and therefore should not be included in the bankruptcy process. Though no figures have been shared by the company, financial sources in Moscow indicate that close to $600 million of the groups assets were at risk.
Founder and president of distressed debt specialist VR Group, Richard Deitz, stated that they would fight tooth and nail on the case. He informed the press that they will do every thing within their means to protect their assets and as such none of the funds under the group are in any sort of ‘jeopardy’.
Deitz has gone a step ahead and assured its investors and clients that the company will go all out to contain the crisis. Its client list includes the who’s who in Moscow, London, Geneva and New York. The Washington Post reports:
“The sources said VR's mainly-Russian team had regularly scored well in hedge fund performance surveys, while the outfit was shortlisted for an award this year by industry journal Hedge Funds Review”
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