Hedge Fund Marble Ridge To Shut After Neiman Marcus Blowup

Hedge fund Marble Ridge Capital LP is shutting down after a U.S. government investigation found its managing partner at fault for trying to interfere with Neiman Marcus Group Inc.’s auction of assets in bankruptcy.

The firm told investors it would start returning money and wind down operations following a report from the U.S. Department of Justice that detailed the actions of founder Dan Kamensky, according to people familiar with the matter, who asked not to be identified because the details aren’t public. A spokesman for Marble Ridge confirmed the fund was winding down.

The U.S. Trustee, a bankruptcy court watchdog, accused Kamensky of misconduct for trying to stop a competing bidder from buying some of Neiman Marcus’s assets. Marble Ridge characterizes itself as the largest single unsecured creditor of the luxury retailer as of its bankruptcy date, according to a report submitted by the trustee.

“After much consideration, and in light of the operating environment, we have made the difficult decision to commence an orderly wind-down of the Marble Ridge funds,” the firm told investors late Thursday.

It declined to comment further on the report from the government agency, which was filed in the U.S. bankruptcy court earlier that day.

“Marble Ridge will manage the liquidation in the best interests of our investors and with the objective of protecting and enhancing the value of the funds’ assets,” the firm told investors.

The winding down was earlier reported by Reuters.

New York-based Marble Ridge was founded in 2015 by Kamensky, a former partner at hedge fund Paulson & Co. who started his career as a bankruptcy attorney. The firm specializes in distressed debt investments and the restructuring of troubled issuers.

Marble Ridge has challenged Neiman in public forums long before the retailer’s bankruptcy filing. It repeatedly attacked the company for actions including moving its valuable MyTheresa assets to a subsidiary out of its reach.

The recent altercation in Neiman’s bankruptcy came to light in recent weeks when U.S. Bankruptcy Judge David R. Jones, who is overseeing the reorganization of the company, asked the trustee to investigate Kamensky’s actions while he served on an official committee of unsecured creditors.

The trustee expedited its investigation and reviewed around 3,200 pages of documents, according to a court filing. The trustee report found that Kamensky “reiterated that he could go to jail” and said his request for rival bidder Jefferies to stand down and not bid on the assets was “just a large misunderstanding.”

The court hasn’t yet taken any formal action against Kamensky, and U.S. Trustee Henry Hobbs asked the judge to consider what “remedial measures” are appropriate given the investigation’s findings.

Kamensky said he had been trying to buy the MyTheresa shares for several years and amassed $3.5 million in legal fees, according to the report. Marble Ridge manages over $1 billion in assets, the people said.

©2020 Bloomberg L.P.

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