While shareholders have traditionally been denied the right to put a company into bankruptcy involuntarily, the bankruptcy team at The Deal instinctively turned its gaze on the involuntary Chapter 11 pending against collapsed hedge fund Ritchie Multi-Strategy Global LLC to see if that route exists for Bear Stearns' investors. Three petitioning investors, Benchmark Plus Partners LLC, Benchmark Plus Institutional Partners LLC and Sterling Low Volatility Fund QP, insist their investments make them creditors in liquidating Ritchie because the payment date on their $46.08 million in claims is past due.
Ritchie, a unit of Lisle, Ill.-based Ritchie Capital Management LLC before it sold its entire investment portfolio last fall, wants to dismiss the involuntary on grounds that the petitioning creditors are investors and therefore aren't entitled to put Ritchie into bankruptcy involuntarily or file claims against it. It wouldn't be a stretch to think that Bear Stearns, too, could be similar target for hedge fund investors, even with the Federal Reserve Bank-J.P. Morgan bailout pending.
Given the perceived importance that the Fed has attached Bear Stearns to when it comes to the banking system, events are moving too fast for bankruptcy to be much of an option, especially when it comes to an involuntary filing. But if banking dominoes continue to fall, what happens in Ritchie could have an impact in other situations involving financial services institutions in trouble. Judge Susan Pierson Sonderby of the U.S. Bankruptcy Court for the District of Illinois in Chicago is due to rule on the Ritchie matter on April 3.
Additional coverage will come later in The Daily Deal and on TheDeal.com. -- Terry Brennan
See related story from TheDeal.com
See Ritchie profile from The Deal's Bankruptcy Insider
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Hopefully Cayne paid cash for his apartment
