Fallout from the collapse of the brokerage gathers pace. Bawag, a union owned Austrian bank has engaged a firm of American attorneys, McDermott, Will & Emery, to act on its behalf.

The bank is seeking to recover some of the €350 ($423m) it lent to Phillip Bennett, Refco's former CEO. It also lent €75m to Refco corporately.

Bennett's loan was secured against his 35% stake in the brokerage. Since the collapse, Bawag is effectively the largest shareholder in the company.

Exactly who is the target of Bawag's action is not clear. However this will be announced in the near future.

Neither did Bawag disclose how they intend to reduce the financial impact of the loans, except to say exposure would be reduced following "transactions in the secondary market".

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