Zwirn’s board and some of its biggest investors chose Fortress, a New York-based private equity and hedge-fund manager, to liquidate the assets. Fortress was picked from nine candidates including a group headed by Irish financier Desmond Dermot, the people said. They asked not to be identified because the discussions are private.
Daniel Zwirn, 37, who runs the New York-based company, told investors in February 2008 he planned to wind down his flagship D.B. Zwirn Special Opportunities Fund LP. The fund makes loans to companies including those that have trouble getting financing elsewhere. Zwirn decided to close the fund when investors asked to withdraw more than $2 billion after a delay in the release of the fund’s 2006 financial audit.
Fortress’s takeover would mark the end of Zwirn’s involvement with his seven-year-old firm, which managed $5.5 billion at its peak. Zwirn, who will be paid $1.95 million by the fund in deferred compensation from 2008, used $13 million of his own money to run the company since October, the people said.
The only winner out of this arrangement is undoubtedly Fortress, which by many accounts, has some amusing MTM issues of its own.
Nothing like an upcoming $2.5 billion BWIC to force more short squeezes across the credit universe (remember, this is Bizarro world). Our condolences to the DB Zwirn back office who had hoped to keep on "liquidating" assets well into the 2020's. Maybe as consolation they can all take one last jaunt in the corporate jet, which the SEC may or may not have seized by now. Sphere: Related Content Print this post
Fortress will be reimbursed for costs of winding down the fund, plus 1 percent of the fund’s net assets, the people said. It also will get 5 percent of any profit it makes. Zwirn’s investors will pay more than $21 million in one- time fees associated with the liquidation of assets.The fund also will set aside $15 million to pay any future claims or fines.