Former Bermuda customers of bankrupt broker-deal Refco Capital Markets Ltd. ? the main Bermuda unit of the troubled futures broker ? are unlikely to recoup more than a fraction of the hundreds of thousands of dollars lodged in trading accounts with the firm when the group collapsed last October.

In total, Refco Capital Markets owes customers nearly $4.2 billion. Of that, Bermuda-based customers are out by more than $800,000, according to documents on file with the US Bankruptcy Court, Southern District of New York, detailing Refco Capital Market?s shaky financial position.

Refco Capital Markets ? which had not had a significant presence on the Island for some time ? is, along with other unregulated Refco units, now under Chapter 11 bankruptcy proceedings in the US, and provisional liquidation proceedings in Bermuda. A second Bermuda-based unit, Refco Global Finance Ltd., is also subject to the actions.

Refco Capital Markets? total liabilities, including the $4.2 billion owed to customers, stand at $5.3 billion. And about $718 million is owed to affiliate companies.

Although customer funds were held in trading accounts, as it stands now, there is little hope of a full return after the US court ruled customers only qualify for unsecured creditor status. This means they will only be repaid once the debts of secured creditors, like banks, are met.

Unsecured creditors typically recover about 40 cents on the dollar under US Chapter 11 bankruptcy proceedings. But some of RCM?s biggest customers are taking the matter into their own hands, suing Refco Capital Markets for the return of nearly $2 billion. One of the most aggrieved is Russian VR Global Partners, owed some $720 million by Refco Capital Markets.

Bermuda-registered RCM customers out of pocket include Accutrust S.A., Cameron Capital, Capitania Asset Management Ltd., FLI Capital Structure, Gulfstream Financial Ltd., Strategic Opportunity Fund Ltd., Transvest Ltd. and Value Capital L.P., the main fund of Bermuda hedge fund management company West End Capital.

Conyers Dill & Pearman and Williams Barristers & Attorneys are acting as co-counsel in Bermuda on the Refco matter. Two firms were appointed because a number of Conyers Dill lawyers had previously served as Refco company directors.

Sally Henry, a New York-based lawyer representing Refco Inc. debtors, said during a December 15 court hearing in the US Bankruptcy Court that CD&P needed to be retained because of its knowledge of the entities, but a second firm was also needed to rule out concerns over CD&P?s earlier involvement.

At the December 15 hearing, lawyers said the exact financial state of Refco Capital Markets depended largely on its ability to recoup monies owed it by other Refco companies. And it also was not clear whether any of the proceeds from the sale of Refco?s regulated units last year were going to ?trickle down to RCM?, something that was said to have significant bearing on the Bermuda unit?s financial condition.

Refco?s crisis dates back to October 10 when it announced its chairman and chief executive Philip R. Bennett had hidden $430 million in bad debt from investors. Bennett, after paying back the debt and stepping down from Refco, was arrested on October 12 and charged with securities fraud, sending the company into a death spiral.

Bennett repaid the loan through an emergency loan from Austrian bank, Bawag P.S.K. Group, a long-time Refco client. The loan was wired into an account at Refco Capital Markets in the early morning hours of October 10, according to international news reports, hours before Refco went public with its financial woes.

The company listed on the New York Stock Exchange two months before being hit by scandal.

At the time of its collapse, Refco, through its regulated and unregulated units, owed its customers about $17 billion. London-based Man Group Plc, the world?s largest publicly-traded hedge fund firm, bought Refco?s US-licensed futures brokerage, Refco LLC, in November for $319 million in cash and assumed debt.

RCM, as an unregulated unit, handled private trades in contrast to the trades made by other Refco units on regulated exchanges, like the Chicago Mercantile Exchange. Refco, before its collapse, was the the largest broker on the Chicago Mercantile Exchange.