Chidem Kurdas
Just when you think Max Holmes’ Plainfield Asset Management can’t get into any more trouble, fresh bad news crops up. The manager made losses on real estate and faced major redemptions. This January a news report said $2.74 billion of Plainfield’s $3.3 billion total assets belonged to investors who wanted to redeem but were not allowed to.
In an unusual move, Plainfield set up an auction to let investors sell their stakes in the secondary market, according to HedgeFundAlert. The idea was to allow investors to cash out without forcing the manager to sell off assets.
But now people involved in the situation say the firm created liquidation funds to sell assets. To make matters worse, the value of those assets declined in the months after the special funds were created.
Among those waiting for the liquidation is a large fund of funds with institutional investors as its clients. Mr. Holmes’ distressed credit strategy used to be popular with investors but not after the events of the past year. The institutions now want out from the fund of funds as the latter waits to get the money back from Plainfield. Bad feelings all around.
Meanwhile, it transpired that Plainfield was under investigation by the Manhattan district attorney’s office as to whether it defrauded companies to which it lent money. You might say that Plainfield is now the distressed party.
Tags: Max Holmes
HedgeFundSmarts 
December 8, 2010 at 4:17 pm
[…] One of the prominent credit managers who ran into trouble, Max Holmes, is a highly regarded expert in the field and was expected to do well. Yet his firm, Plainfield, made significant losses and customers were not allowed to redeem when they wanted to. Plainfield continues to liquidate its funds, a process that’s been going for some time. […]