Investors in D.B. Zwirns Special Opportunities Fund will be asked over the next 15 days to approve Fortress Investment Group as liquidator of the $2.5 billion hedge fund, according to a source with knowledge of the situation who asked not to be identified.
D.B. Zwirn & Co. will close. Zwirn employees will join Fortress, said the source, with the exception of Daniel B. Zwirn, the firms founder and managing partner. Mr. Zwirns plans could not be learned.
A committee made up of Zwirn board members and larger investors selected Fortress from among nine candidates for the liquidator role, the source said.
Investors will pay about $21 million in liquidation fees. Fortress will be paid 1% of net assets and 5% of any profits made in selling off the portfolio, which the source said could take between two and four years because many of the funds investments are illiquid. About $15 million of fund assets will be set aside to pay future claims or fines.
Brian Maddox, a Zwirn spokesman, and Lilly Donohue, managing director of investor relations for Fortress, both declined to comment.