A Manhattan bankruptcy judge yesterday granted a motion to put a federal trustee in charge of bankrupt hedge fund Fletcher International over the protests of its parent firm, which is managed by Alphonse “Buddy” Fletcher.
The ruling was a win for three Louisiana pension funds that invested $100 million in one of Fletcher’s funds in 2008 and have been battling to get their money back for more than a year.
Judge Robert Gerber said the decision was in the “best interest” of all stakeholders to “maximize value and decrease the need for litigation.”
His decision was made over the opposition of Fletcher Asset Management, the corporate entity run by Buddy Fletcher, who is also suing the board of the fabled Dakota co-op where he lives.
Fletcher International made the motion for the trustee, which was supported by the Louisiana firefighters and municipal workers it has been fighting with over control of the assets.
The parent, Fletcher Asset Management, argued instead for an examiner, which a source close to the investors called another delaying tactic.
Recent court documents indicate that Fletcher International has about $40 million in assets.
In a previous court hearing, David Lurie, a lawyer for the pension funds, lambasted Fletcher for its “elaborate shell game of corporate structures.”
A trustee would speed resolution of the case and keep parties from warring over control of the diminishing assets, said lawyers supporting it.
Fletcher Asset Management attorney Robert Stark argued that the bankrupt entity was not a hedge fund but a “private-equity fund with long-term horizons.” As a result, he said, time was needed for its illiquid investments to reach their true value.
Buddy Fletcher, who appeared in the courtroom for the first time since the fund declared bankruptcy in June, declined to comment, as did his attorney.