Tuesday, 31 May 2016
Last updated 12 min ago
Aug 19 2008 | 9:06am ET
A troubled Greenwich, Conn., hedge fund has filed for bankruptcy in an effort to head off a forced asset sale.
Windmill Management’s SageCrest Finance and SageCrest II filed for Chapter 11 bankruptcy protection yesterday in U.S. Bankruptcy Court in Bridgeport, Conn. In a letter to investors, the firm said the filing was needed to ensure an orderly liquidation to prevent further losses to investors.
SageCrest has already been hit by a pair of investor lawsuits, one alleging that Windmill overvalued its assets and another—which seeks to take control of the fund—accusing the firm of failing to come through on a redemption request. Windmill had already begun liquidating the fund prior to the bankruptcy filing.
A lawyer for Windmill said the bankruptcy filing “has nothing to do” with those lawsuits. Instead, it was triggered by a demand from Deutsche Bank to sell assets at a discount to pay off a $7 million loan.
“Deutsche was being fairly aggressive in attempts to force management to sell assets and pay them off,” Bill Brewer, the attorney, said. “Selling assets in a tight credit market is an inadequate way to secure value and they want more time to get better values.”
In its bankruptcy filing, SageCrest claimed fewer than 49 creditors and debts of between $1 million and $10 million. The hedge fund, which once boasted assets of as much as $650 million, said it now had between $50 million and $100 million.