Camulos Wins Liquidation Battle Against Angry Investor

Mar 30 2010 | 12:06pm ET

Camulos Capital has beaten back a bid by a disgruntled investor to force it to liquidate one of its hedge funds, winning an important victory for all Cayman Islands-domiciled hedge funds, according to its law firm.

The Caymans Court of Appeal threw out a winding-up petition against the Camulos Partners Offshore fund, ruling that it was improper to seek to liquidate a solvent hedge fund that refused to meet an investor’s demand. The investor in question, Austrian private bank Kathrein & Co., filed two contributory winding up petitions against the Camulos fund after Camulos suspended redemptions from the fund.

Kathrein in 2008 sought to redeem some US$27 million from the fund. It was not alone: Camulos, like many hedge funds that summer, was inundated with redemption requests, first offering an exchange to limit them—which Kathrein rejected—and then suspending redemptions entirely.

The private bank sued Camulos last April, demanding its US$27 million, including 15% in cash. Three months later, it threatened to seek the fund’s liquidation, filing the petition in September after a judge rejected Camulos’ bid for an injunction.

But it appears the hedge fund has had the last laugh: The appeals court directed Kathrein to employ regular legal channels to get its money back, ruling that winding up petitions cannot be used to place improper pressure on companies to give in to their demands. The court also ordered the bank to pay Camulos’ costs.

“The clear message is that disputes between an investor and a hedge fund should ordinarily be litigated in the usual way, i.e., by way of writ of summons or originating process in the Grand Court’s new Financial Services Division,” Walkers, Camulos’ Caymans lawyer, wrote. “It is inappropriate and likely to be an abuse of the Court’s process for an investor to seek to use the threat of a winding up petition as a means of placing undue and improper pressure on a company or fund to accede to its demands.”


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.