Three investors in a troubled onshore hedge fund, Ritchie Multi-Strategy Global, filed a petition Wednesday in U.S. Bankruptcy Court in Chicago, seeking involuntary Chapter 11 bankruptcy protection for the fund, which is managed by Ritchie Capital Management, and financial disclosure about the fund. The investors all hedge funds of funds are Benchmark Plus Partners, Benchmark Plus Institutional Partners and Sterling Low Volatility Fund, which have aggregate claims as creditors of $45 million, said Jeff J. Marwil, attorney for the investors and partner and co-chair of the restructuring and insolvency group of law firm Winston & Strawn.
At one time, the onshore fund and its offshore sibling managed a combined $3 billion, but now Ritchie Capital is in the midst of winding down its operations and liquidating its assets, according to court documents filed by Mr. Marwil. In March, Ritchie Capital sold $1 billion, or about half the assets of its flagship global multistrategy hedge fund, to Rhone Holdings II, a subsidiary of Reservoir Capital Group. Ritchie continues to manage the assets; the current combined size is not available. In court documents, Mr. Marwil said the onshore hedge fund has about $60 million in cash and is owed about $170 million in additional management compensation from Rhone Holdings II. Mr. Marwil said the investors initiated the involuntary bankruptcy petition process to insure that RCM has not and does not misuse its control of the funds to the economic detriment of investors.
In an e-mail, Justin Meise, a Ritchie Capital spokesman, wrote that the firm considered the filing to be a transparent publicity stunt designed to obtain an advantage over fellow investors. The filing is unjustified and without merit, and Ritchie Capital will vigorously seek dismissal by the bankruptcy court. To be clear, the filing contains no specific facts supporting Benchmark and its attorneys' allegations of wrongdoing.