In the U.S. Bankruptcy Court in Manhattan on Friday, AQR Capital Management sued a the broker/dealer unit of Refco demanding that it repay $2.7 million that was used as collateral for commodity futures transactions, according to a report form Dow Jones.
AQR filed the suit on the part of AQR Capital funds Absolute Return Master Account LP and AQR Global Asset Allocation Master Account LP.
The firm claims that Refco Capital Markets did not return the funds' collateral upon demand on Oct. 12. As an alternative it issued a 15-day freeze on customer withdrawals, and as a result terminated 16 swap agreements that were held before Refco filed for bankruptcy on Oct.17. AQR is requesting that the agreements be terminated, and that Refco does not have "equitable interest" in AQR's security deposit.
A trial will be held on Dec. 15 at the U.S. Bankruptcy Court to answer whether the cash that is being held at Refco's unregulated units belongs to customers or the bankruptcy estate.
The Cayman Island-based funds of Connecticut-based AQR are listed as the largest unsecured customer in Refco's bankruptcy case, with combined claims equaling $28.5 million.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.