George Weiss, founder of bankrupt hedge fund firm Weiss Multi-Strategy Advisers, owes investment bank Jefferies $100m after personally agreeing to guarantee a debt package prior to the firm becoming insolvent, according to a report by Bloomberg.
Thee report cite Jefferies as claiming in a court filing that a personal guarantee from the hedge fund boss prevents his Weiss Multi-Strategy Advisers from using its recent bankruptcy to reverse a 12 February forbearance agreement. The investment bank also published a copy of the agreement, which has become central to a dispute between the two firms.
Under the terms of Chapter 11 rules, under certain circumstances troubled companies can reverse unfavourable deals they have entered into before bankruptcy. In its court filing, Jefferies claims that some provisions in the forbearance agreement, including the alleged George Weiss guarantee, “are immune” from such power.
In a written statement issued on Friday, Weiss’s lawyer Howard Kaplan said that his client never agreed to guarantee payment of Jefferies’ notes and that the the forbearance agreement is being challenged in bankruptcy court.
Weiss Multi-Strategy filed bankruptcy on 29 April, two months after the hedge fund announced it was shuttering and returning capital to investors.
