An involuntary Chapter 11 bankruptcy case was filed against the Ritchie Multi-Strategy Global fund on Wednesday in the Bankruptcy Court for the Northern District of Illinois, Winston & Strawn LLP said in a statement.
BOSTON (Reuters) - An investor group has filed a petition in court to declare bankrupt the flagship fund of hedge fund firm Ritchie Capital Management, the law firm representing the investor group said on Thursday.
An involuntary Chapter 11 bankruptcy case was filed against the Ritchie Multi-Strategy Global fund on Wednesday in the Bankruptcy Court for the Northern District of Illinois, Winston & Strawn LLP said in a statement.
The petitioners -- Benchmark Plus Partners LLC, Benchmark Plus Institutional Partners LLC and Sterling Low Volatility Fund -- are owed about $45 million by the fund, it said.
In conjunction with the petition, the investor group also filed a motion seeking to investigate if Ritchie Capital defrauded the fund, the law firm said.
!ADVERTISEMENT!The fund, which has faced investor demands to return their capital amid declining performance in recent years, has halted redemptions since September 2006 as it worked to wind itself down and sell off its portfolio, the law firm said.
Ritchie Capital, headquartered in Lisle, Illinois, said in an e-mailed statement that the filing was unjustified and it would vigorously seek dismissal of the case in court.
"Ritchie Capital believes the filing is a transparent publicity stunt designed to obtain an advantage over fellow investors," it said.
In April, much of the portfolio of the Multi-Strategy Global fund and another fund were sold to an affiliate of investment firm Reservoir Capital, in a debt and equity deal worth $1 billion.
But Ritchie Capital continues to manage the portfolio sold to Reservoir Capital's affiliate, which the investor group feels creates a conflict of interest, the law firm said. It also said Ritchie Capital has refused to provide any financial information about its dealings with the two funds.
"As a result, the petitioning creditors commenced the involuntary bankruptcy case in order to insure that Ritchie Capital Management has not and does not misuse its control of the funds to the economic detriment of investors," the law firm said.
Ritchie said in its statement: "The fund has shared all relevant information that has been requested by Benchmark and other investors."
(Reporting by Muralikumar Anantharaman; Editing by Braden Reddall)
