By Teri Buhl
A former top dog portfolio manager at hedge fund Plainfield Asset Management, Marc Sole, is using the funds of his new hedge fund to try and buy out remaining investors in the now defunct Plainfield for a discount. According to offer documents seen by this reporter Sole, who now works for $4 billion Hudson Bay Capital, offered investors in four liquidating Plainfield funds 52 cents on the dollar. The problem is investors say they never received a transparent valuation from Plainfield, or the liquidators PwC Cayman, of the remaining amount of their interest in the funds.
Plainfield made international headline news in 2008 for gating their $5 billion fund funds and locking investors from cashing out. The fund founded by Max Holmes, who now teaches at NYU’s Stern school of business, was investigated by the SEC for inflating investors assets to received excessive fees. The SEC cleared the fund of its investigation in June 2012, according to a letter from the SEC, but was extremely slow in winding down the fund. Plainfield 2008 Liquidating Ltd. And Plainfield 2009 Liquidating Ltd. were put into voluntary liquidation in the Cayman Island on December 31st 2013 according to public filings at gazettes.gov.ky According to investors, the portion of assets in these funds is only a sub/residual piece of what Plainfield had originally invested in. Plainfield was also investigated by the Manhattan D.A. for its loan to own practices with small cap companies but was never charged by the D.A. for wrong doing.
Sole started with Hudson Bay in 2011, he was one of Max Holmes right hand guys helping pick investments for the failed fund. The Hudson Bay Absolute Return Credit Opportunities Fund made the offer to Plainfield investors, who are mostly institutional money, on December 16th 2014. Investors were given only 30 days to decide if they want to take the deal. Ian Stokoe and David Walker are running the Plainfield liquidation at PwC Cayman.
Sole chose to enlist the help of Plainfield’s former General Counsel Thomas X. Fritsch who is now an attorney for white-shoe Wall St. law firm Boies, Schiller & Flexner LLP. Fritsch is known for his dirty tactics defending Plainfield after the media was questioning the ethics of the hedge fund leadership. In 2011 I published a story showing Max Holmes caught on camera encouraging his staff how to avoid possibly incriminating emails by cc’ing Fritsch on the communication to claim attorney client privilege.
Unlike investors, Sole and Fritsch who worked as senior executives at Plainfield through its hype and downfall should have some sense of what assets are being liquidating and judge what value they could fetch on the open market.
One institutional investor who received the Hudson Bay offer told this reporter this week in an email, “Needless to say as an LP I find this offer in extremely poor taste and offensive. Are Sole and Fritsch that desperate to make a buck that the only way they can do it is to use inside info to screw over LPs? Shameful.”
Fritsch and Sole did not return a request for comment at press time.
The same Plainfield investor said, “We don’t have any visibility/transparency from Plainfield to ascertain current value. Our firm wrote off significant amounts in prior years. This is a stub/residual piece. We didn’t even dignify the offer [from Hudson Bay] with a response.”
It’s unclear how many Plainfield investors took the Hudson Bay offer which expired on June 15th 2015.
Plainfield’s website says, “At the end of May 2012, Plainfield substantially completed the liquidation of the funds which it managed and deregistered, in good standing, from the S.E.C.” Legal filings in the Cayman’s obviously show there is more liquidation to be done. Why Marc Sole is now offering investors some discounted cash for the fund’s remaining investments is unclear.