Hedge Funds

Judge Shrugs Shoulders At Hedge Funds, Says ‘Whaddyagondoboutit’

Baupost Group, Paulson & Co. and Cargill’s hedge fund unit think it’s awfully fishy that the corpse of Lehman Brothers is so eager to sell almost $3 billion in bankruptcy claims to Elliott Management and King Street Capital Management for a little over $1 billion. Especially since CarVal would like to pay almost $1.5 billion for the same claim.

U.S. Bankruptcy Judge James Peck thinks it’s all a little strange, too. But, to use the parlance of our times, tough shit.

“I have no factual basis to that there is anything about this transaction that is truly suspect,” Judge Peck told the assembled lawyers and onlookers in a Manhattan courtroom. “No facts have been presented, only suspicions….”

“Inquiring minds want to know, but so what?” said Judge Peck in response to a protest about the deal’s opacity from one funds’ lawyer.

Lehman’s Chapter 11 plan delegated decision-making authority to the reorganized Lehman’s new board, which is required to maximize value for creditors. The judge said he was loath to set a precedent where big hedge funds could interfere with the business decisions of a reorganized company’s board.

“I’m not prepared today to create a precedent that is unwise,” he said.

Judge Clears Way for Elliott, King Street Purchase of Lehman Claims [Dow Jones via NASDAQ]

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3 Responses to “Judge Shrugs Shoulders At Hedge Funds, Says ‘Whaddyagondoboutit’”

  1. FeelingMyAge says:

    Hell, yeah! National Enquirer reference!

  2. a side says:

    So what you're saying, Judge Peck, and correct me if I'm hearing you wrong, is that you don't have the balls, metaphorically speaking, to nut up and bang out this decision. That you're not willing to get in there and get your hands dirty. Well, I've spent enough time around the kind of men who prefer to keep own their hands clean and damn the consequences. I'd tell you to go fuck yourself, but I know it would be a waste.

    – Paulson, Klarman, et al

  3. Javier Gonzalez, PhD says:

    Ignorance on the part of the judge is no excuse to let a transaction like that go though, especially if somebody else if willing to pay more for the assets.