Fate of RefcoFX.com still up in air

Customers of RefcoFX.com who thought a mid February court decision would finally end their association with bankrupt futures brokerage Refco and free up their account funds recently got an unpleasant surprise.

Instead of approving the $110 million bid RefcoFX.com received from Forex Capital Markets (FXCM) — the only bid made on RefcoFX.com — bankruptcy judge Robert Drain delayed a ruling until March 10 to give both sides more time to work on the details of the deal and to give other firms another chance to make a bid.

Drain acted on the advice of Refco’s creditors, who believed FXCM was submitting too low a price and would soon seek to sell RefcoFX.com’s assets at a huge profit. The creditors believe Refco should wind down RefcoFX.com — essentially let its customers transfer their accounts to other brokerages and sell the 35-percent share it owns of FXCM (which FXCM was buying back in its bid).

“This move … is in total disregard of the damaging effects on RefcoFX customers,” says Drew Niv, CEO of FXCM. “RefcoFX customers now will continue to face uncertainty over the fate of their money, despite our offer to make them completely whole and to give them full access to their accounts.”

In a letter sent to U.S. Bankruptcy Court, FXCM claims the delay is hurting business, as the firm says it lost almost $14 million in January.

“Our offer has been shown by the auction process to be more than adequate,” Niv says. “The process is designed to provide the best value to the bankrupt estate by giving bidders an incentive to pay top dollar. The opposition [to the deal] — without proffering any alternative better bid will certainly harm the RefcoFX customers without any assured benefit to [Refco].”