Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Caribbean Net News – The trustee liquidating Bernard Madoff’s investment-advisory business has asked a judge for a default ruling against Harley International Ltd, arguing that the Cayman Islands hedge fund failed to respond to a lawsuit accusing it of taking $1.07 billion in fake profit from Madoff’s firm.
If trustee Irving Picard’s July 2 request is granted, the hedge fund, run by Cayman Island-based Euro-Dutch Management Ltd, would be ordered to return money it allegedly withdrew during the six-year period before New York-based Bernard L Madoff Investment Securities LLC collapsed in a $65 billion fraud. Harley is being liquidated in a Cayman Islands court.
Lexington Herald-Leader – A bankruptcy judge agreed Tuesday to postpone a hearing on a hedge fund’s request for the appointment of an examiner in horse track owner Magna Entertainment’s Chapter 11 bankruptcy case.
At the request of attorneys, a hearing originally scheduled for Tuesday on the request by Greenlight Capital Offshore Partners was postponed until Aug. 18.
CNBC – Attorneys for a hedge fund are asking for the appointment of an examiner in horse track owner Magna Entertainment’s Chapter 11 bankruptcy case.
A hearing was scheduled Tuesday on the request by Greenlight Capital Offshore Partners, which wants an investigation of ties between Magna and its parent company, known as MID.
MID has played a dual role as both a potential bidder for MEC assets and one of its primary lenders.
Greenlight, an unsecured creditor of Magna as well as a large shareholder in MID, is concerned about the fairness of any asset sale.
New York Times Blogs – In his court testimony on Wednesday in New York, Mr. Wilson — formerly a senior executive of Silver Point Capital, a hedge fund specializing in distressed-debt investments — described some of the negotiation process that shaped G.M.’s bankruptcy case. The administration’s auto task force had decided upon an asset sale plan by mid-May, as G.M. began a debt-exchange offer with its bondholders as part of a government-supported restructuring plan.
By pursuing an asset sale, G.M. could be assured of greater speed, certainty and the ability to shed unwanted liabilities, Mr. Wilson said.
Because the government was essentially G.M.’s lender of last resort, it could effectively dictate what it found acceptable as a turnaround plan, Mr. Wilson testified.
Reuters – Hedge funds that provided bankrupt U.S. auto parts maker Delphi with debtor-in-possession (DIP) financing are not getting access to the firm’s books, hindering their ability to make a takeover offer, the New York Post reported, citing a person familiar with the situation.
The lenders are led by hedge fund Elliott Associates, the paper said.
In case they do not get access to Delphi’s books soon, the lenders may approach the judge handling the bankruptcy case to intervene, a source told the paper.
Boston Globe – The trustee in the bankruptcy case of swindler Bernard L. Madoff has told a hedge fund business owned by Massachusetts Mutual Life Insurance Co. to return money that it received from Madoff over the past six years.
Responding to a Boston Globe inquiry, bankruptcy trustee Irving Picard confirmed that he had sent a so-called clawback letter to Tremont Group Holdings Inc.
Tremont is among more than 225 former Madoff investors who have received such letters from Picard, on the grounds that the money belonged to other investors, because Madoff never generated any real investment profits. Picard wants to recoup the disbursed funds to have more money to repay investors for their losses. He has threatened to sue anyone who doesn’t return the funds.
Reuters – U.S. private equity firm TPG has expressed interest in providing debtor-in-possession (DIP) financing for Aleris International Inc, a company it bought in 2006, a source familiar with the situation told Reuters.
The private equity firm wasn’t able to participate in an original round of DIP financing because of technical reasons, but expressed interest in the secondary DIP, the source said.
Aleris, a maker of aluminium products, filed for Chapter 11 bankruptcy protection last month.
The Financial Times reported earlier that TPG asked the judge in the Aleris bankruptcy case to allow it to join a group offering the DIP facility. The source that spoke to Reuters, however, said that TPG had not asked the court or judge to intercede.
West Palm Beach – A pair of SemGroup LP executives are the only two administrators named to receive bonuses from both the bankrupt Tulsa company and its publicly held and struggling subsidiary, SemGroup Energy Partners LP, tulsaworld.com first reported Thursday.
Pete Schwiering and Jerry Parsons were named among 10 SemGroup LP leaders slated to receive up to $3.8 million in combined incentives if the Tulsa-based company meets or exceeds certain criteria, according to bankruptcy court records in Delaware. The incentives are designed to keep employees on board while SemGroup LP sells off assets or emerges from Chapter 11 protection.
Schwiering and Parsons both could gain up to $468,750 in additional pay under the SemGroup LP incentive plan. Schwiering heads up SemCrude oil operations, while Parsons leads the company’s SemMaterials asphalt unit.
Last month, SemGroup Energy Partners’ compensation committee approved bonus pay for five executives, including CEO Kevin Foxx, Schwiering and Parsons, according to a Securities and Exchange Commission filing.
Parsons’ bonus pay for his SGLP asphalt work totaled $215,000, while Schwiering received an additional $120,000 for leading the public company’s crude oil operations, according to reports.
The parent SemGroup filed for bankruptcy protection July 22 after admitting its traders lost $2.4 billion in failed oil futures transactions. The company also owes $2.5 billion to banks and other lenders and up to $1 billion to oil and gas producers who sold their product on credit, according to reports.
Hedge funds Manchester Securities and Alerian Capital Management gained SGLP board control when the parent company defaulted on a $150 million loan, and the public firm tried to find other, third-party customers for its storage and pipeline services.
SemGroup Energy Partners is not a debtor in the bankruptcy case, but it suffers from its own credit default and cash-flow challenges, records show. Schwiering has worked for SemGroup since 2000, the year that it was founded. Parsons joined SemGroup in 2006. Neither SemGroup LP or SGLP spokesmen could be reached for comment.
