Black Diamond To Buy Bankrupt GSC Assets

Jun 9 2011 | 1:03pm ET

Bankrupt hedge fund GSC Group has formalized a restructuring plan to sell its assets to another hedge fund.

GSC's Chapter 11 trustee, James Garrity, filed the deal—in the works since an October auction—in federal bankruptcy court. Under the plan, which Garrity called "the best available outcome" for GSC creditors, Black Diamond Capital Management, which won the October auction, would take over what's left of GSC in two deals.

The first involves Black Diamond, GSC's lead lender, forgiving $224 million in secured debt and giving GSC a $6.7 million promissory note and $5 million in cash for GSC's investment-management business. The second involves lenders forgiving the rest of the debt for the rest of GSC's business.

The two deals will leave $18.6 million to cover legal fees and pay back creditors.

Garrity's move seeks to preempt a rival plan put forward by secured creditors that would have wiped out unsecured creditors. Garrity's plan leaves about $4.6 million for the latter group.

"Were their support to evaporate, which could happen all too suddenly," Garrity said of the secured creditors under the rival plan, "it could spell disaster for the estates and would almost certainly preclude the trustee from fashioning an exit strategy for the debtors that could yield a distribution to unsecured creditors."


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

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

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

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.