Insolvency practitioners from PricewaterhouseCoopers have been appointed as liquidators of Weavering Macro Fixed Income Fund, a hedge fund specialising in fixed income investments.
Insolvency practitioners from PricewaterhouseCoopers have been appointed as liquidators of Weavering Macro Fixed Income Fund, a hedge fund specialising in fixed income investments. The move follows the fund’s announcement on March 11 that it was suspending redemptions, as well as an investigation into a large interest rate swap position with a company controlled by a related party.
‘Since early November, the fund had received redemption requests exceeding USD223m, but could only meet USD90m of these,’ says Matthew Wilde, head of PwC’s hedge fund restructuring team. ‘With a further wave of provisional redemptions of up to USD65m in the pipeline, the directors of the fund called us in to look at the options.
‘The resolution to wind up the fund was made after a brief review concluded that its balance sheet value, most recently USD506m, was almost entirely dependent on the value of a series of interest rate swaps totalling USD637m.
‘[These] had been struck with a company that was revealed to be a related party to the fund manager and lacked the value necessary to support the swaps. This left the fund with no reasonable prospect of paying its debts and no option but to request that liquidators be appointed.’
A voluntary liquidation of a Cayman registered company is a process governed by statute. Cayman law requires that where a company is insolvent, or of doubtful solvency, the liquidation process must be supervised by the court.
The liquidator’s role includes establishing independent control over the company and taking control of all assets, opening a communication process with creditors and shareholders, establishing a stable base from which to maximise realisation from the assets, investigating the circumstances which led to the company’s current financial position, and considering all the options available to maximise reimbursement of creditors and investors.
‘It appears likely that there will be a very substantial shortfall to the fund’s creditors and its remaining shareholder investors may be left with little,’ Wilde says. ‘It is clear that there is much to be understood about the circumstances of these trades, and creditors and shareholders will soon be advised of details of a meeting of creditors to which the liquidators will report their findings.’
