Ritchie hedge funds set accelerated schedule for asset sale, seek to hold auction on Dec. 10

By Reshmi Basu

New York, Nov. 14 - Ritchie Risk-Linked Strategies Trading (Ireland), Ltd. and Ritchie Risk-Linked Strategies Trading (Ireland) II, Ltd. set an accelerated schedule for the sale of substantially all of their assets as a federal judge indicated that he was growing intolerant of the stalling Chapter 11 process.

The assets to be sold include the companies' pool of insurance policies, the right to collect benefit proceeds from the related issuing insurance companies, the right to proceeds of policy loans or withdrawals post-purchase and the right to proceed against any state guarantee fund and other property and interests in property.

In court Wednesday, counsel for the bankrupt hedge funds said that 10 qualified bidders had emerged from round one of the auction process. The funds will now negotiate with the parties to embark on round two.

Meanwhile, a major roadblock was removed as Coventry First LLC has now agreed to submit information related to the insurance policies after previously declining to do so, according to Ritchie Risk attorney Lewis S. Rosenbloom of LeBoef, Lamb, Greene & Macrae LLP

In 2005, Ritchie Capital Management, Ltd. purchased the insurance assets from Coventry First, a Philadelphia-based secondary market trader of life insurance policies. Those polices make up the portfolios of the two funds.

In earlier proceedings, Coventry First contended that the information relevant to confidentiality obligations and contractual rights, such as the identity of policy owners, should not be shared with other interested parties.

Ritchie Risk, however, argued that the information was needed because a sale could not happen without transparency.

Furthermore, Rosenbloom asked that an auction be scheduled for Dec. 10, with the sale hearing taking place on Dec. 13. The deadline for objections would be Dec. 12.

"We recognize it's an aggressive schedule," he told the court, adding that there is a need for urgency because the hedge funds' financing expires on Dec. 15.

"We have been unable to secure an extension of that facility," he explained.

Judge Burton R. Lifland of the U.S. Bankruptcy Court of the Southern District of New York approved the time line.

"This matter has been pending a bit too long," he told the court.

Ritchie Capital Management's two Ireland-based hedge funds filed for bankruptcy on June 20. Their Chapter 11 case number is 07-11906.

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