Liquidations Experience

The following are summaries of some of the recent engagements that we have undertaken.

Madoff Feeder Fund Liquidation

We assisted in securing a $1.6bn settlement from the US Madoff Trustee. This necessitated considerable forensic analysis of investors, potential clawbacks sought by the US Trustee and potential clawbacks against the Fund’s investors. We are involved in ground breaking ongoing litigation with respect to the priority under Cayman Islands Law of certain groups of investors who sought to redeem at various times both before and after the news of the Madoff Ponzi scheme came to light. There is also litigation ongoing in relation to the power of a Cayman Islands Official Liquidator to restate the register of investors using a methodology other than the Last Statement Basis, in circumstances where the majority of the Fund’s assets related to investments in the Madoff Ponzi scheme. A related matter, also subject to litigation, is the question of an Official Liquidator’s power to adjust the holding of an investor who had entered into the Fund via an in specie subscription of Madoff interests, which included a substantial portion of fictitious profits, and where recognition of such fictitious profit would substantially disadvantage the other investors in the Fund.

Liquidation of an Offshore Investment Platform with Various Regulatory and Compliance Breaches

We were appointed to wind down the operations of a $50m offshore retail brokerage platform following the arrest and imprisonment of key staff who were jailed for money laundering offences in the US. The role of the liquidators involved investigating the affairs of the companies involved, transferring assets to new brokerage houses, remediating regulatory non-compliant accounts, resolving freezing injunctions and working closely with local regulatory and law enforcement officials.

Liquidation of a Private Equity Fund of Funds Structure

We acted as voluntary liquidator of a Fund of Funds which had reached end-of-life, but which had become non-compliant with the provisions of its constituting documents and as a result faced being placed into court supervised liquidation. This would have had significant cost implications for the investors. We were instrumental in assisting the Company’s application to the court to allow the liquidation to proceed on a voluntary basis resulting in a reduction in costs over the term of the liquidation. The Fund held a range of illiquid equity positons in the technology space through individual SPVs. The liquidation has involved the liquidators making a number of secondary market sell/hold investment decisions and calculating and approving distributions. The liquidators have had to deal with multi-jurisdictional compliance issues and have also acted as directors of various SPVs working to minimise costs and maximise realisations.

Acting as Official Liquidators of a Cayman Registered Fund Operating in Hong Kong

We are acting as Official Liquidators of a Cayman registered fund which invested in high quality wine vintages in the UK and in Asia. Investors were concerned that the manager had become unresponsive and that although the life of the fund had come to an end, no steps had been taken to regularise its wind down. A voluntary liquidator was appointed in Hong Kong, but the directors/manager failed to file a statutory declaration meaning that it was necessary for the liquidation to be converted to a court supervised liquidation. The Official Liquidators have realised the remaining stocks of vintage wines by way of a tender process, but have also had to deal with issues of provenance in respect of certain of the wines as the wine labels are ones which in the past have been subject to forgery. The manager is now in liquidation in Hong Kong and its liquidators are assessing the likelihood of potential recoveries from its directors.

Acting as Voluntary Liquidators of a Distressed Fund Structure

We are acting as voluntary liquidators of a Cayman master fund with Cayman and Delaware feeder funds, holding a range of illiquid private equity and bond positions. The assets include a power station in South America, property and land holdings in North America, all of which were in an advanced state of distress and required stabilisation before they could be monetised.  This process was complicated by the limitation of free cash to enable the voluntary liquidators to stabilise the assets due to the existence of side pockets with different investor entitlements. There is ongoing litigation in the New York Second Circuit which when resolved by the liquidators enabled cash to be released to facilitate the stabilisation of the assets. Once this was done, the voluntary liquidators were able to bring the assets to market, despite the limited resource available.