Disclosure Ruling Has Hedge Funds Retreating
Friday, March 2, 2007 : PermalinkNew York – Judge Allan Gropper of the U.S. Bankruptcy Court in New York this week ordered a group of hedge funds that were demanding the formation of a shareholders committee to disclose all of their holdings in the airline, when they were purchased and for how much.
Soon after the disclosure ruling the hedge fund shareholders withdrew their motion to have a say in the payment deals after the Northwest Airline Corp reorganization. Hedge funds are known for their fiercely guarded trading secrets and so far have succeeded in resisting regulation.
The shareholder group led by Owl Creek hedge fund has said it holds a total of 30% of Northwest’s stock and about $164.7 million in claims. Northwest said shareholders will receive nothing and existing shares will be canceled upon the carrier’s exit from bankruptcy.
Gropper’s ruling would enforce Bankruptcy Rule 2019, which says parties in a Chapter 11 case acting as a group must disclose certain information about their holdings. The decision requires the 13 investment funds on the official committee to make public information about trading patterns, holdings and pricing, which hedge funds have labored for decades to keep secret.
Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net
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