Picking the bones of the Refco carcass

The Geneva-based company was able to come off relatively unscathed, negotiating down its initial offer to re-acquire the majority stake sold to Refco in June 2004.

Others were not quite as lucky. FXCM for example, in whom Refco also owned a stake, was shunned by creditors last year. Refco initially bought a 20% stake in FXCM in January 2003, then upped it to 35% in 2004.

In March last year, FXCM abandoned negotiations with Refco creditors to acquire the assets of the defunct brokerage's unregulated currency trading operation. It said Refco's creditors were "unreasonable" and "inflexible" towards its $130 million bid for the assets of Refco FX Associates (RFXA), after rejecting the offer. This is despite the fact that FXCM had actually even bid against itself to acquire the assets, having initially offered $110 million.

Gain Capital also had a volatile time with the creditors. On June 30 last year, Refco FX Associates and Gain reached a preliminary agreement to acquire RFXA retail customer account information and related assets. But then, on July 26, both parties announced proposed agreements had been jointly terminated because they were unable to reach terms on a final asset purchase agreement.

Then, on October 30, RFXA said it had entered into an agreement with Saxo Bank to purchase the customer list for $500,000, subject to higher offers, which on November 9 Gain submitted. By November 14, the purchase agreement was approved as submitted by the US Bankruptcy Court.

Under the terms of the agreement, Gain paid an upfront fee of $750,000 for the entire list of approximately 15,000 customer accounts and more than 150,000 marketing contacts. In addition, it had agreed to further remuneration in the form of an activation fee of $100 per account, payable on every account over $4,000 opened before the second anniversary of the closing date of November 16, 2006.

Gain also paid RFXA an annual maintenance fee of 1% of the average account balance of each customer, payable on the first and second anniversaries of the closing date.

Next to all the wrangling that went on, ACM has had a relatively easy time of it. Others, such as UK financial services firm Man Financial also fared well. Shortly after the collapse of Refco, it reincarnated part of the old Refco business with the launch of Man FX Clear in December 2005.