Hedge Fund That Lost 96% Survived Long Enough To Breach Contracts, Lose Subsequent Legal Battle


That Ebullio Capital Management's Commodity Master Fund would be liquidated is not a surprise: Most hedge funds that lose 96% in two months meet such a fate.

What is a surprise is that said fund is liquidating three-and-a-half years after those losses, and only because (a) it was still able to find counterparties with which to enter into contracts that it could breach or reach oral agreements to roll, depending on whose story you believe, and (b) because a Cayman Islands judge has ordered it be so.*

Unfortunately for the ECMF's remaining (and, it must be said, very patient) investors, this means that their losses are about to be extended to 99.8% or so.

Noble Group Ltd. won a court order appointing liquidators for Ebullio Commodity Master Fund LP, which Asia’s largest raw-materials trader said had failed to pay it about $4.9 million for contract breaches.

Judge Andrew Jones of the Cayman Islands Grand Court accepted Noble’s petition and appointed Matthew Wright of RHSW (Cayman) Ltd. and Finbarr O’Connell of Smith & Williamson LLP as liquidators of the hedge fund, according to an Aug. 23 order….

A Noble unit sued Ebullio Commodity Master Fund on April 30, claiming it was insolvent after failing to pay damages when it breached two copper contracts. The hedge fund had said it had an oral agreement to roll over the contracts and filed for arbitration against Noble, saying they shouldn’t have been terminated, according to a May 24 ruling.

Noble Wins Court Order to Liquidate Ebullio Master Fund [Bloomberg]

*Also surprising: (c) That Ebullio Capital Management still exists in any form, and that investors continue to entrust $250 million to its other funds, which are unaffected "in any size, shape or form," and that 25 people in Southend-on-Sea continue to draw a paycheck from it, and that it posted a $1.1 million profit last year.