Wednesday, 31 August 2016
Last updated 1 hour ago
Mar 16 2011 | 12:20pm ET
Plainfield Asset Management, the embattled distressed debt hedge fund, is liquidating its hedge funds and will return all capital to investors by the middle of next year.
The firm has been hit with several whistleblower complaints accusing it of overvaluing assets and faces a pair of predatory lending probes. Last month, it struck a deal with private equity firm Paul Capital to unload a portfolio of illiquid debt positions for about $150 million, and two years ago it restructured its flagship to set up a liquidating share class. Assets under management have fallen since then from $3.6 billion to $1.1 billion.
Investors still with Connecticut-based Plainfield will get all of their money back by next June under its liquidation plan, HFMWeek reports. But despite the legal trouble—neither Plainfield nor founder Max Holmes have been formally accused of any wrongdoing—and the drastic move, the liquidation may not spell the end of the firm.
Plainfield's general partners are considering a plan to have the firm live on, and to launch a new fund managed by Holmes.
The firm also responded to the latest whistleblower complaint against it, asking the Securities and Exchange Commission to impose a trustee on the firm to oversee the wind-down of the fund.
"This is yet another in an unending series of anonymous complaints against Plainfield which have no merit," the firm's general counsel, Thomas Fritsch, told HFMWeek. "Under the Dodd-Frank Act, we have no opportunity to confront our accusers. For them to leak yet another letter to the press, while hiding behind several layers of anonymity, is an abuse of the law and demonstrates their malicious intent to harm our reputation."