George Town, Grand Cayman in the Cayman Islands ()
Matthew Wright, a lawyer with RHSW Caribbean, a liquidator appointed by a Cayman Islands court, and his colleague Christopher Kennedy filed the Chapter 15 petition to protect Platinum’s U.S. assets amid investigations by the U.S. Department of Justice and U.S. Securities and Exchange Commission.
Holland & Knight litigation partner Barbra Parlin, bankruptcy partner Arthur Rosenburg and associate Warren Gluck are advising Platinum in its Chapter 15 case, a section of the U.S. bankruptcy code used for international insolvencies. Rosenberg said that Holland & Knight has previously worked with liquidators Kennedy and Wright and began representing Platinum several weeks prior to its bankruptcy filing. Court records show that the firm has worked with Platinum to cooperate with inquiries from the Justice Department and SEC.
Kennedy, Wright and RHSW are being advised by Stephen Leontsinis, a partner and head of dispute resolution at Cayman Islands-based offshore firm Collas Crill, which made news last week for acquiring British Virgin Islands firm Farara Kerins. (Collas Crill, which hired Leontsinis last year from Kobre & Kim, also has offices in Singapore and the Channel Islands of Guernsey and Jersey.)
Platinum Partners Value Arbitrage Fund (International) Ltd. and Platinum Partners Value Arbitrage Fund (in Provisional Liquidation) Ltd. “are experiencing severe and substantial liquidity problems that threaten to result in the devaluation of the funds’ assets,” according to their bankruptcy petition.
Since it launched in 2003, Platinum has generated exceptional profits for its investors by often investing in risky businesses. But in June, the hedge fund began to unravel.
Less than a week after Platinum co-founder and former executive Murray Huberfeld was arrested in connection to an alleged bribery of the New York City corrections officers’ union president in return for a $20 million investment into the firm, Platinum announced plans to unwind its main hedge fund, Platinum Partners Value Arbitrage Fund. (In July, Platinum hired former federal prosecutor Bart Schwartz, chairman of the board at Guidepost Solutions LLC, as an independent monitor to oversee the liquidation of its two main funds.)
As of June 30, Platinum reported assets of $1.09 billion, according to Reuters. Federal prosecutors then announced a separate investigation into Platinum’s operations led by the U.S. attorney’s office in Brooklyn, New York, and assisted by the FBI. Since seizing control of Platinum, RHSW has begun examining allegations of asset overvaluation by Platinum, the liquidators said in bankruptcy filings.
Court filings also show that RHSW is looking into the potential sale of notes in bankrupt Implant Sciences Corp.—a company that owes big money to some of its outside lawyers—and an investment by Platinum’s master fund into Houston-based oil and gas company Northstar Offshore Group LLC.
New York-based private equity firm New Mountain Finance Corp. filed an appearance in the Platinum funds’ bankruptcy case claiming to be owed close to $32 million from a master fund in relation to a securities purchase from 2014. Lowenstein Sandler bankruptcy partner Paul Kizel is representing New Mountain.