Nakagama & Wallace Investment Management, New York, a fixed-income manager, has begun offering a portfolio restructuring service for institutional investors.
Elliott Detchon, chief executive, investments, said the Orange County, Calif., bankruptcy has acted as a wake-up call to some funds that have risky, illiquid securities similar to the Orange County portfolio, and some are interested in finding ways to restructure those portfolios without resorting to drastic measures.
The first prospective client is a municipal fund that is experiencing problems similar to Orange County's, said Mr. Detchon. The firm is proposing to restructure a $6 million collateralized mortgage obligation allocation from the unidentified city's $15 million fund.
The firm will charge a fee based on assets under management, said Mr. Detchon. He said the sponsors will not be charged for setting up the account, but Nakagama & Wallace will be hired to manage the remaining securities in the portfolio and provide a short-term program to get the fund back on track with its investment objectives.
"There are a lot of people out there that did things that were very disappointing. There are things we can do to help them out," said Mr. Detchon. "There are alternatives to liquidating the portfolio."
In many cases, problem portfolios can be restructured successfully if it is done on a timely basis, said Mr. Detchon. Even Orange County could have avoided bankruptcy had it acted sooner to restructure its portfolio, he said.