Once-Top CMBS Hedge Funds File For Bankruptcy

Oct 22 2010 | 1:59pm ET

A pair of hedge funds run by Petra Capital Management have filed for bankruptcy, citing liabilities of as much as $500 million with assets of as little as $1 million.

Petra's Offshore Fund and Fund REIT Corp. sought Chapter 11 bankruptcy protection in Manhattan yesterday. The firm, founded by commercial mortgage-backed securities market pioneer Andrew Stone, said the filing was part of a restructuring agreement is has reached with a secured creditor.

The five-year-old firm said the funds' troubles were linked, unsurprisingly, to the crash of the real-estate market. The REIT fund was also backed by troubled insurance firm American International Group and follows a judgment against the funds won by one of its creditors, KBS Preferred Holding I.

Stone was a former star mortgage-backed trader at Salomon Brothers before moving on to build CMBS desks at Daiwa Securities and Credit Suisse First Boston. He was reportedly pushed out of the latter due to the aggressive loans he wrote.

It is unclear how the bankruptcy filing will affect Petra's other investments. The hedge fund is said to manage about $3.7 billion.


In Depth

Humble in Hofstra...One Debate an Election Can Make

Sep 26 2016 | 10:20am ET

Tonight's U.S. Presidential debate, infamously coined the “Humbling in Hofstra...

Lifestyle

Vortic: Reimagining the Custom Wristwatch

Sep 27 2016 | 7:24pm ET

American watch manufacturer Vortic, which started out restoring antique pocket watch...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...