Breaking News
0

Investors challenge Tilton's U.S. bankruptcy plan for her Zohar funds

Stock MarketsMar 13, 2018 05:49PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: New York financier Tilton arrives for an appeal hearing at the U.S. District courthouse in New York 2/2

By Tom Hals

WILMINGTON, Del (Reuters) - A lawyer for investors in Lynn Tilton's distressed debt empire told a U.S. judge on Tuesday that his clients plan to challenge her plan to use a bankruptcy filing to end years of legal battles over her private equity portfolio.

The comments kicked off the first hearing after Sunday's Chapter 11 bankruptcy filing by three Zohar funds, which raised about $2.5 billion from investors to acquire equity and loans to companies that Tilton was trying to turn around.

An attorney for the Zohar funds told Judge Christopher Sontchi that bankruptcy would provide the best forum for resolving years of litigation that has dogged Tilton, the Zohar funds and her Patriarch Partners private equity firm.

The Chapter 11 filing was aimed at halting litigation in eight different venues and bringing more than a dozen parties to one court, according to Zohar attorney Michael Nestor. With the various strands of litigation on hold, Tilton planned to sell or refinance some of her portfolio companies and use that money to pay off in full the investors in the Zohar funds.

An attorney for holders of Zohar notes, however, warned that Tilton and the Zohar funds had to resolve who actually controlled the equity of the portfolio companies, which includes MD Helicopters, Stila Cosmetics and Rand McNally, a map company.

"The truth is the equity ownership does matter and it goes to the heart of what this case will be about, and that goes to control," said Brian Lohan, a Sidley Austin attorney who represents holders of Zohar notes. He said the bankruptcy filing was "very surprising," a point echoed by others, who said they had no warning the company was considering Chapter 11.

Nestor told Sontchi the equity ownership did not matter investors would eventually be paid off, resolving their dispute with Tilton.

Management of Tilton's Zohar funds passed to an affiliate of advisory firm Alvarez & Marsal in 2016, as the portfolio companies struggled to pay off their loans. However, Tilton has argued that she retained voting rights for stock owned by Zohar, giving her control over the portfolio companies.

Since then, the investors and MBIA Inc, which insured the notes against default, have been locked in litigation, in part to determine who controlled Tilton's portfolio companies.

Investors challenge Tilton's U.S. bankruptcy plan for her Zohar funds
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email