Investors in Peloton Partners’ collapsed asset-backed securities hedge fund will likely receive nothing, the firm’s apologetic founder said.

In a conference call with investors Wednesday, Ron Beller, the Goldman Sachs veteran who co-founded the London-based firm three years ago, apologized a number of times as he admitted there would probably be no money left after the once-US$2 billion ABS Fund pays off its creditors.

The fund, which returned 86.6% last year during difficult times for credit markets, was wiped out when its portfolio of mortgage-backed securities fell sharply in recent weeks. As it missed margin calls, banks began to seize its assets. The fund has since liquidated to repay banks, which may still be on the hook for some of the losses.

According to Peloton, several lenders severely tightened their terms “without regard to the creditworthiness or track record of individual firms.”

Beller said he will hold one-on-one meetings with clients.

Peloton also plans to liquidate its Multi-Strategy Fund in the coming days, which had managed US$1.6 billion, including a US$500 million investment in the collapsed ABS fund. Beller said he did not know how much would be recovered from the Multi-Strategy fund after its assets were sold.

The ABS fund reportedly held US$17 billion in long positions—including subprime mortgage-linked securities—and US$6 billion in short positions.