For troubled hedge fund Peloton Partners, things have gone from bad to worse.

After the London-based shop announced plans to liquidate one fund and suspend redemptions from another, some of its lenders have seized assets. According to Reuters, some of the fund’s lenders became even more skittish when Citadel Investment Group—which has made a cottage industry of buying portfolios from failing hedge funds, including Amaranth Advisors and Sowood Capital Management—indicated that it is not interested in the portfolio of Peloton’s ABS Master Fund.

The ABS fund's troubles stem from investments in some highly-rated fixed-income securities. In its letter to investors announcing the liquidation, Peloton wrote that it has “recently experienced difficulties in the challenging credit markets,” and complained that lenders have been tightening lending terms “without regard to the creditworthiness or track record of individual firms.”

Reuters reports that not all of Peloton’s lenders have gone nuclear; some are cooperating with the hedge fund’s plans for an orderly liquidation.