A federal bankruptcy judge has appointed a trustee to oversee a bankrupt Fletcher Asset Management hedge fund, a victory for three Louisiana public pension funds that invested $100 million in the vehicle.
U.S. Bankruptcy Judge Robert Gerber said a federal trustee would "maximize value and decrease the need for litigation." The motion, made by the fund, Fletcher International, which filed for bankruptcy in June, was opposed by Fletcher Asset Management, which placed the fund into bankruptcy to prevent Cayman Islands-appointed liquidators from selling the fund's assets.
The Louisiana pensions, which pushed the winding-up petition in the Cayman Islands, where Fletcher International is domiciled, backed the trustee appointment. The pensions have been battling with Fletcher for more than a year, after Fletcher filled their July 2011 redemption request with promissory notes.
Fletcher's lawyer said that an examiner should have been appointed instead, as Fletcher International is not so much a hedge fund but a "private equity fund with long-term horizons." Court documents indicate that the fund has only about $40 million in assets left.
Fletcher Asset Management founder Alphonse Fletcher attended yesterday's hearing in Manhattan.