Bayou Management's U.S. hedge funds filed for Chapter 11 bankruptcy protection today in New York and at the same time filed lawsuits against some former Bayou investors who allegedly received fictitious profits and oversized returns, according to a news release from law firm Jenner & Block. Jeff Marwil, a Jenner & Block partner, is the hedge funds' court-appointed receiver. In the news release, Mr. Marwil said he expected to file additional lawsuits "against the remaining former investors to recover proceeds of fraudulent conveyances for the benefit of innocent investors who have received little, if anything, from Bayou."
The hedge fund allegedly defrauded investors out of about $450 million.
The Chapter 11 filing will provide a way to "efficiently investigate and pursue former investors and other non-investor third parties allegedly complicit in the fraud, with the goal of assuring an equality of distribution among all of Bayou's investors," Mr. Marwil said in the release.
Mr. Marwil was not available to provide additional details by press time. H. Jeffrey Schwartz, a partner at law firm Dechert, is assisting as outside counsel.