NEW YORK (Bloomberg) ? PlusFunds Group Inc., a bankrupt New York money manager, agreed yesterday to cap its claims against units of defunct futures broker Refco Inc. at $7 million, a reduction of $525 million.

PlusFunds also will withdraw its objections to Refco?s plan to pay creditors. US Bankruptcy Judge Robert Drain in New York is to consider approving the plan on December 15. Refco, which filed for bankruptcy protection in October 2005, had sought to disallow $532 million in claims by PlusFunds.

?It?s a terrific thing for all the Refco debtors because it?s going to permit them to make distributions,? Sabin Willett, a lawyer for the trustee of Refco Capital Markets Ltd., said in an interview. ?If you had to hold back half a billion dollars, that would be a half billion less under a lot of Christmas trees.?

Willett, of Bingham McCutchen, told Drain earlier the two sides had ?an agreement in principle?. The accord must be approved before Dec. 15 by Drain and U.S. Bankruptcy Judge James M. Peck, who is overseeing PlusFunds? bankruptcy case. PlusFunds filed for bankruptcy in March.

L.P. Harrison III, a lawyer for PlusFunds with Curtis, Mallet-Prevost, Colt & Mosle, wouldn?t comment on the settlement. Megan E. Cleghorn of Skadden, Arps, Slate, Meagher & Flom, who represents the debtors, also had no comment.

Refco, based in New York, filed the 15th-biggest bankruptcy in US history Oct. 17, 2005, a week after disclosing that former chief executive officer Phillip Bennett concealed $430 million in debt. PlusFunds, whose former chairman was a Refco executive, lost customers after its connection to Refco was revealed in a lawsuit filed in December.