You might think that Highland Capital Management founder James Dondero wanted to continue managing his hedge fund. After all, he’s been fighting his investors in court for years to retain that privilege. But then you remember that for Dondero, litigation is essentially sport, and now that said hedge fund is bankrupt, he can finally rid himself of those investors of whom he thinks so little. Plus, it frees him up to pursue his non-courtroom-based passion projects.

The Texas-based business on Friday asked the U.S. Bankruptcy Court in Dallas to approve a tentative deal that would overhaul its corporate-governance structure. Changes would include the creation of a three-member independent board of directors at controlling general partner Strand Advisors Inc., as well as the departure of James Dondero, who, if the court approves the settlement, will no longer be a director or employee of Highland or Strand…. On Monday a spokesperson for Highland Capital and Mr. Dondero said the agreement will help facilitate a reorganization that will create value for all parties. She said the change affects only the bankrupt business, so Mr. Dondero’s roles with NexPoint Advisors and Highland Capital Management Fund Advisors remain unchanged.

Highland Capital Management LP Co-Founder Out Under Deal With Creditors [WSJ]

Related

gavel-money-bills-law-legal-litigation-finance-300x221

Insolvent Millionaire Says Multi-Billion Dollar Hedge Fund Doesn’t Have $175 Million

Certainly not $175 million to pay aggrieved investors money they won at arbitration.

By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Highland Capital Not Alone In Not Having To Pay Huge Judgments Against It

Alas, the former hedge fund’s not going to like this one as much as the others.

By Jonund (Own work) [CC0], via Wikimedia Commons

Highland Capital Founder Whips Out His Thesaurus To Insult Investors

Jimmy Dondero's got a host of pet names for his clients.

Highland Capital Management Founder Sees Your Hiding Of Assets And Raises You A Megalomaniacal Prick

As some of you may recall, back in March, Highland Capital Management founder and CEO James Dondero testified that he is "insolvent under Texas family law, if not according to normal accounting rules," despite a 2010 tax return showing his adjusted gross income that year to be in excess of $36 million. The reason his finances were in question was because Dondero filed for divorce in September, and how much he owes his wife Becky is currently in dispute. Becky is "seeking enforcement of a prenuptial agreement guaranteeing her half of the couple’s community property, capped at $5 million," plus "spousal support and interim attorney fees." James, perhaps you can glean, is hoping it will be less than that and perhaps even nothing. One thing that really didn't help? Patrick Daugherty, a former senior portfolio manager at Highland who quit in October, testified that he met with James Dondero for drinks last month. “He told me his plan was to get his net worth down and pay her as little as possible,” said Daugherty, who was called to the stand by Becky Dondero. That testimony was given on March 28th. On April 11, this happened: Highland Capital Management, the $20 billion hedge fund and private equity firm based in Dallas, has launched a lawsuit that calls its former private equity investing chief a “megalomaniacal” manager who engaged in “abusive tirades” that “dehumanized employees.” Patrick Daugherty is the former head of stressed special situations and private equity at Highland Capital Management, where he was responsible for $8 billion of assets until he resigned in September 2011. Known as a blunt-speaking Texan, Daugherty has served on the board of Metro-Goldwyn-Mayer and as chairman of companies like Cornerstone Health Group. According to a 14-page complaint Highland filed in Texas state court in Dallas earlier in April, Daugherty has been paid in excess of $26 million while at the firm, but voluntarily resigned after “Highland refused to accede to his unacceptable ultimatums and megalomaniacal demands regarding compensation.” The lawsuit claims that Daugherty was “belligerent to peers” and that Highland employees complained and even quit after Daugherty publicly berated them as “‘f—ing idiots’” and disparaged them using other vulgarities. Highland, which has a reputation in the investment community for using hard-hitting tactics, pulls no punches in a lawsuit that at times can appear cruel. It claims that Daugherty’s tenure at Highland was characterized by extreme behavior and his performance diminished over the years as he “became increasingly unmanageable, erratic, and insubordinate.” It didn't have to be this way, Patrick! $20 Billion Highland Capital Calls Former Private Equity Chief "Megalomaniacal" [Forbes]

1200px-Flag_of_Texas.svg

This Hedge Fund vs. Ex-Employee Lawsuit HAS EVERYTHING

Sexual relations with subordinates, deals to turn South American companies into condom factories, gun collections as collateral, AND MORE.