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West Palm Beach (HedgeCo.net) – Due to their recent share decrease, Lehman Brothers Holdings Inc. has agreed to sell majority interest to asset manager Neuberger Berman. The transaction will create a new, independent investment management company to be called Neuberger Investment Management, managing approximately $160 billion of assets as of 30 November 2008.
Lehman Brothers Private Equity Partners Limited (LBPE) and certain of its affiliates will be a part of this transaction. The sale is subject to final Bankruptcy Court approval, and closing is expected in the first quarter of 2009.
LBPE’s Board of Directors believes this transaction will significantly benefit the Company by providing the management team of the Investment Manager a strong platform from which to continue managing LBPE’s high quality private equity portfolio and support the long term success of the Company.
LBPE will also host a conference call later this week for investors and analysts to discuss the Investment Manager update and the Company’s performance. An updated investor presentation will be published on the Company’s Web site prior to the conference call on 12 December 2008.
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Reuters – Lehman Brothers Holdings Inc agreed on Wednesday to sell its 45 percent stake in hedge fund R3 Capital Partners for $250 million in cash and a $250 million investment in another fund managed by R3.
Lehman, which filed for bankruptcy protection last month, acquired the stake in May in return of a roughly $1 billion investment, according to document filed in U.S. Bankruptcy Court in Manhattan.
R3 Capital is run by Richard Rieder, a former head of global principal strategies at Lehman.
Lehman owned the non-voting, minority ownership stakes in the master fund, general partner, special limited partner and management company of R3 Capital Partners, an asset manager of funds investing primarily in corporate bonds and loans.
Bloomberg – Lehman Brothers Holdings Inc., the U.S. investment bank holding company that filed the largest bankruptcy in history, faces objections to a proposed $1.75 billion sale of its broker-dealer unit to Barclays Plc.
Hedge fund Harbinger Capital Partners asked a U.S. bankruptcy judge to block the sale unless Lehman immediately discloses cash transfers it made just prior to its bankruptcy, including an alleged $5 billion transfer of cash from Lehman’s London office. Another two hedge funds, Bay Harbour Management LC and Amber Capital, filed papers alleging $8 billion was moved.
The objections continued to roll in as a hearing to approve the sale, scheduled for 4 p.m., was delayed as hundreds of participants and onlookers overcrowded a courtroom in U.S. Bankruptcy Court in Manhattan.
Lehman “must provide adequate information, and certify its accuracy, as to what cash has moved in and out of Lehman Brothers Inc. and debtor Lehman Brothers Holdings Inc.,” Harbinger said in court documents filed today with U.S. Bankruptcy Judge James Peck.
CFO.com – Even hedge funds are not immune to the credit crunch. A small hedge fund that provided short-term debt to companies has filed for Chapter 11 bankruptcy protection.
Greenwich, Connecticut-based SageCrest Finance, managed by Windmill Management, said in its Chapter 11 petition filed in U.S. bankruptcy court that it had listed assets of $50 million to $100 million, and debt between $1 million and $10 million, reported Reuters. The fund had about $1 billion in assets under management as recently as a year ago, according to hedgefund.net.
In fact, the website points out that the credit crunch put the squeeze on SageCrest’s business strategy — which is providing asset-backed specialty financing to smaller private companies that have been closed out of traditional sources of capital. Many of its projects involved extending art-, real estate-, and structured settlement-based loans.
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.
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New York (HedgeCo.Net) – Greenwich-based hedge fund SageCrest Finance has filed for Chapter 11 bankruptcy protection. The credit opportunity fund, which grants short-term loan to companies left with few financing alternatives, said its recent losses were due to the condition of the debt markets coupled with mounting lawsuits.
The fund once managed around $900 million. Current assets are listed at $50-$100 million. In addition to providing short term capital to businesses, SageCrest also extended loans to plaintiffs in slip-and-fall lawsuits. They also dabbled in the art world and are caught in a nasty battle mired with scandal to retrieve $40 million which they claim is owed to them.
SageCrest is run by Alan and Philip Morton. The fund has had its recent share of bad press, with two investors suing the company for various reasons this year. Westerly Capital filed a suit in June claiming the managers ran the fund to their own benefit and to the detriment of its clients. This followed an earlier suit by Wood Creek Capital Management, who claimed that SageCrest did not adhere to its redemption policy.
In a petition filed on Sunday in U.S. Bankruptcy Court in Connecticut, SageCrest listed debts in the range of $1 million to $10 million.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – While Delphi continues its quest to secure the capital needed to exit bankruptcy, GM has announced they will increase their loan to the auto parts maker to $950 million. The extra $300 million will help Delphi maintain some liquidity throughout the process.
Delphi, who sought bankruptcy protection in October 2005, pulled together an exit strategy that included a $6.1 billion influx of capital. Hedge fund Appaloosa Management took the reins and agreed to provide $2.55 billion to help lift them out of Chapter 11.
Former parent company GM also came to the rescue and promised a whooping $2 billion piece of the puzzle. However, Appaloosa proceeded to walk away from the deal during the final days in April, leaving Delphi with no other alternatives.
Delphi took action against the hedge fund in hopes of making it deliver on the promised capital. The hedge fund bailed amidst what they thought was an increasingly risky situation. They also were concerned whether or not Delphi has an overreliance on GM.
Delphi’s next hearing is scheduled for August 26th in the U.S. Bankruptcy Court in New York. GM just reported a $15.5 billion quarterly loss, one of the largest in their history.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Bloomberg – Bear Stearns Cos. didn’t investigate the financial health of a hedge-fund client that later collapsed because its claim of an annual 20 percent return on investment “made perfect sense,” a former executive at the firm said.
Bear Stearns was sued in 2001 by a bankruptcy trustee on behalf of creditors of the now-defunct Manhattan Investment Fund Ltd. U.S. Trustee Helen Gredd alleged New York-based Bear Stearns was liable in part for $400 million in investor losses because it didn’t properly inspect the fund’s books, according to a complaint originally filed in a Manhattan bankruptcy court.
A senior Bear Stearns executive learned in 1998 that the fund was claiming a 20 percent return when the securities firm’s records showed a $190 million loss, the trustee said in court papers. The executive, Fred Schilling, was head of prime brokerage sales in 1998 when an investor in the hedge fund praised its returns to him at a cocktail party, he said.
“With the information I had, that Ernst & Young was a third-party administrator, and there were other prime brokers involved, it made perfect sense,” Schilling, referring to the New York-based auditor, testified today during a trial of the case in Manhattan federal court. The executive said he learned an affiliate of the accounting firm aggregated losses and gains from other parties to arrive at the final return rate.
Under U.S. bankruptcy law, if Gredd can prove the securities firm failed to diligently investigate the fund, she can recover around $141 million on behalf of creditors.
Bear Stearns spokeswoman Elizabeth Ventura declined to comment.
