Paul Singer’s Elliott Investment Management has entered a fresh dispute with Texas-based private equity firm Stronghold Investment Management, as the two sides clash over how to wind down an oil and gas fund ordered into liquidation by a Delaware court, according to a report by Bloomberg.
The reports cites court filings showing Elliott and Stronghold have submitted competing proposals to the Delaware Chancery Court following a ruling last month that two partnerships, collectively known as Fund II, must be liquidated. The judge had instructed both parties to agree on a framework for the wind-down, but significant differences remain.
The disagreement centres on several key issues, including which assets should be sold, how the bidding process should be structured, and what expenses should be permitted during liquidation. Elliott has argued that Stronghold affiliates should be barred from bidding on assets, warning that such participation could deter third-party interest and allow the private equity firm to exploit informational advantages.
Stronghold has rejected those claims, maintaining that affiliate participation would increase the pool of bidders and maximise value for investors. The firm has said it would accept safeguards to ensure a conflict-free process.
The dispute stems from a lawsuit Elliott filed in September alleging that Stronghold charged excessive expenses and failed to honour a prior agreement to liquidate Fund II. While Stronghold denies the allegations and has highlighted the returns delivered to Elliott, the court ruled in December that the firm breached the earlier settlement.
Further tension has emerged over cost controls during the wind-down. Elliott is pushing to limit expenses strictly to those directly linked to liquidation, while Stronghold has warned that such restrictions could jeopardise portfolio companies and severely impair its operations.
The parties also disagree on the scope of the sale, with Elliott calling for the disposal of all underlying oil and gas assets, while Stronghold favours selling stakes in holding companies instead.
Although both sides support the appointment of a special magistrate to oversee the process, they remain divided over whether some investors should be allowed to roll their interests into a new vehicle rather than exit entirely — a proposal Elliott strongly opposes.
