West Palm Beach (HedgeCo.Net) – In an “expected, but gratifying victory,” the involuntary bankruptcy suit against Ritchie Capital and its Multi-Strategy Fund has been dropped. Judge Susan Sonderby dismissed the case at a Chicago hearing on Friday, four months after investors tried to force Ritchie to candidly display their balance sheets and other top secrets of the fund.
“We won today because the facts were on our side,” said Ritchie attorney Tom Cauley. “The Fund is fully and timely meeting all of its financial obligations and Ritchie Capital has acted in good faith. Moreover, Ritchie Capital has gone above and beyond the usual standards for hedge funds in providing financial information to their investors.”
The investors, Benchmark Plus Partners and Sterling Low Volatility Fund, wanted to uncover any possible red flags that may have preceded April 2007, when Ritchie sold a majority of the fund’s assets for $285 million. While Ritchie reaffirmed their deliverance of transparency, the investors pushed for access to record books, trading secrets, and other information normally filed as top-secret for hedge funds.
The involuntary bankrupt suit posed yet another problem. Current law states that only creditors of the fund are allowed to file this type of claim, which Benchmark and Sterling are not. Other hedge funds feared that if the judge granted this type of access, the flood gates would open and lawsuits brought on by disdained investors would become the norm.
Neither Ritchie or its funds have ever been in bankruptcy. CEO Thane Ritchie says, “riding out the storm of tumultuous markets is never easy but we have a disciplined strategy and it is working.”
Ritchie intends to seek damages from the investors, upwards of $5 million, for the legal and miscellaneous costs it has incurred. They are also still seeking damages from Coventry First, the life insurance company that was accused of defrauding clients through shady bidding practices.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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