Hedge Funds To Pay $500K In Sanctions To Texas Pacific Group

042610brownNew York (HedgeCo.Net) – Private equity firm Texas Pacific Group (TPG) has been awarded approximately $500,000 in sanctions against three hedge funds who had been pursuing involuntary bankruptcy petitions against two former TPG related companies, according to a report by law firm Kasowitz Benson Torres & Friedman.

The hedge funds and others have pursued TPG in courts around the world throughout the past three years on claims relating to TPG’s investment in a Greek telecom company, Hellas. The plaintiffs are noteholders of Hellas who claim to have suffered over $1 billion in losses from a late 2009 Hellas default. TPG sold its interest in Hellas in early 2007 to third party Wind/Weather. Rather than pursue Wind/Weather for the late 2009 default, the noteholders have been pursuing TPG and its investment partner APAX for allegedly leaving Hellas insolvent when they sold their interest in early 2007.

The Judge’s order awarding sanctions was issued in connection with his dismissal of two involuntary petitions filed in SDNY bankruptcy court by several of the leading hedge funds holding these notes. Kasowitz moved to dismiss the petitions as improperly filed, giving the noteholders a chance to withdraw the petitions or face a motion for sanctions upon dismissal. Judge Glenn granted the motion to dismiss the petitions in early May and subsequently granted Kasowitz’s motion for sanctions on July 18, 2013, awarding TPG $513,000. In issuing the sanctions award, Judge Glenn stated, “The Petitioning Creditors should not be able to wage their global war without consequences.”

Over the last three years, this has resulted in 12 lawsuits, of which six are still pending. On the same day that Judge Glenn dismissed the two petitions, Deutsche Bank, who were also entangled in the Hellas note default, had their case dismissed by Judge Oetken at SDNY district court.

“The amount of attorneys’ fees and costs awarded by the Court in this case is very substantial and will hopefully serve as a deterrent to similar misconduct in the future. The aggressive litigation conduct by petitioning creditors’ counsel has substantially increased the attorneys’ fees and costs expended to defend the Troy Entities against the improperly filed involuntary petitions,” the Judge said.

Alex Akesson
Editor for HedgeCo.net
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