Life Settlement Hedge Fund Auction
Ritchie Funds Delay Asset Auction
Two funds that were put into bankruptcy by hedge fund firm Ritchie Capital Management put off a scheduled auction of their assets, claiming that insurer Coventry First is withholding documents that are critical to the assets’ value.
On Thursday, bankruptcy court judge Burton Lifland agreed to delay the auction until Jan. 9.
The Ireland-domiciled funds sought bankruptcy protection in June after they lost about $700 million on investments in life insurance settlements issued by Coventry First.
Coventry First buys life insurance policies and, after paying the policyholder a settlement price, sells the rights to the policies to investors.
In documents filed in the bankruptcy case, Ritchie claimed that the assets won’t be worth their full value if they don’t include the underlying documentation, called life settlement files, for the asset-backed securities. Coventry is in possession of those files.
Coventry, however, claimed Ritchie never owned the files and, therefore, can’t include them in the auction.
The bankruptcy court judge has yet to rule on the issue of who owns the files, according to attorneys for both sides.
In May, Ritchie sued Coventry First under the Racketeer Influenced and Corrupt Organizations Act. The lawsuit alleges that Coventry defrauded both policy owners and investors by engaging in bid rigging and concealing unlawful practices.
Last year, when New York State Governor Elliot Spitzer was still attorney general, he sued Coventry claiming it engaged in fraudulent practices. That case was mostly dismissed on jurisdictional grounds. A Florida investigation into Coventry was settled without an admission of liability, although the company agreed to pay $1.5 million for the cost of the investigation.
Source: HFN
January 7th, 2008 at 1:06 pm
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February 7th, 2008 at 12:08 pm
[...] Other Ritchie Capital and Coventry Lawsuit Posts: Ritchie sells insurance assets to ABN, Bear Affiliate Ritchie Unit and Coventry Reach Deal Life Settlement Hedge Fund Auction [...]