E&Y Vet Preps $100M Distressed Hedge Fund

Oct 24 2008 | 9:36am ET

While some hedge funds are holding off on launching new products in a difficult fundraising environment, one New York-based shop is going full-speed ahead with a distressed credit offering.

Creditor Liquidity Solutions is readying an eponymous $100 million hedge fund for launch within the next two months, focusing on bankrupt U.S. company debt, including senior, mezzanine, and unsecured positions. The firm is headed by CEO Robert Tannor, who formerly worked in Ernst & Young’s corporate finance group providing advice to distressed companies, creditors and banks in bankruptcy scenarios.

Prior to starting the firm in May, Tannor said he bought a company out of bankruptcy, restructured and is putting all of his assets into new strategy. And according to Tannor, there is no shortage of bankruptcy opportunities to be had these days.

“There are over 500 bankruptcies being filed per week across America,” said Tannor. “Our returns are large and we need to scale up because we have a window of opportunities. The space that we’re in is very fragmented so it’s a problem I have. How do I get the bandwidth? I need analysts.”

Tannor said he’s spreading his investments over a number of bankruptcy cases to reduce concentration risks. The fund’s portfolio currently consists of high-tech, retail, food and mortgage bankruptcies.

The fund charges a 1.5% management fee and a 20% performance fee, and features a $1 million minimum investment requirement.

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