West Palm Beach (HedgeCo.net) – In an effort to head off a forced asset sale, Windmill Management’s SageCrest Finance and SageCrest II filed for Chapter 11 bankruptcy after its assets fell sharply.

The hedge fund filed at U.S. Bankruptcy Court in Bridgeport, Conn. In a letter to investors, The fund said that the bankruptcy process would give SageCrest the time necessary to conduct an orderly liquidation of their assets to maximise the return to investors.

The fund described its investment strategy as making short-term loans to small- and mid-sized firms that cannot secure them from banks and specialty lenders. "Our position in a market where lending opportunities continue to outpace sources of capital provides an ideal point of departure for growth." The SageCrest website says, "Our investments target asset-rich and undervalued situations overlooked by, and with limited access to, the mainstream capital markets."

In its bankruptcy filing, SageCrest claimed fewer than 49 creditors and debts of between $1 million and $10 million. The hedge fund, which once boasted assets of as much as $650 million, said it now had between $50 million and $100 million.

Alex Akesson

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New York (HedgeCo.Net) – The private equity firm Carlyle Group will liquidate its lone hedge fund, after stating that it failed to achieve “critical mass.”

The fund, Carlyle-Blue Wave Partners Management LP, was a multi-strat fund launched by Rick Goldsmith and Ralph Reynolds.  The two managers previously served as co-heads of global equity derivatives at Deutsche Bank.

"This is an orderly liquidation to ensure fair and equitable treatment of all investors," said Carlyle spokesman Chris Ullman.

The fund was among many to suffer losses fueled by the credit crisis that starting brewing last summer.  After posting losses in 2007, the fund looked to be turning around and  even showed gains of 2 percent in 2008.  However, Carlyle said they could not keep up with the cost associated with staff and infrastructure and decided to go forth with the liquidation. 

According to a statement published on the company’s website, the fund was "launched in a challenging market and [has not] been able to achieve the critical mass of assets under management necessary to support a multi-strategy fund infrastructure."

Assets under management are now estimated at $600 million, $300 million less than its peak. 

Julie Scuderi
Senior Editor for HedgeCo.Net
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