Patriarch to step down as Zohar collateral manager, cites MBIA fight

By Caroline Salls

Pittsburgh, Feb. 5 – Zohar CDO 2003-1, Ltd., Zohar II 2005-1, Ltd. and Zohar III, Ltd.’s collateral managers are stepping down from that role, according to a release from Patriarch Partners, LLC, whose entities are the outgoing Zohar collateral managers.

Concurrent with this resignation, Patriarch Partners XV, LLC, the largest creditor of Zohar CDO 2003-1, will be withdrawing its opposition to the motion to dismiss the involuntary Chapter 11 cases that it filed for Zohar I.

According to a Friday news release, Patriarch XV filed the involuntary petitions in order to protect itself and Zohar I “after years of fruitless restructuring negotiations with MBIA and with the good faith hope that a consensual plan of restructure could be accomplished.”

Despite its efforts, Patriarch said it has become clear that the parties will be unable to reach a consensual resolution in these matters.

Patriarch Partners chief executive officer Lynn Tilton said her firm will now focus on managing the more than 70 operating companies in the Patriarch portfolio.

A new collateral manager for the Zohar entities is yet to be announced.

“The constant litigation between Patriarch and MBIA that began in 2009 and continues today has created an unproductive and untenable relationship between parties who by definition should be aligned,” Tilton said in the release.

“Since 2011, I have publicly represented to the controlling classes and the noteholders that my sole interest in serving as collateral manager was to serve the best interest of the funds, and that Patriarch was willing to transfer their collateral management roles if such would be in the best interest of the funds.

“The battles have led me to make the decision that I could no longer leave this choice open, but instead my firm and I must step down so we can focus fully on driving the value of the portfolio companies.”

Zohar is a Grand Cayman, Cayman Islands-based collateralized debt obligation. The involuntary petition was filed on Nov. 23 in the U.S. Bankruptcy Court for the Southern District of New York under case number 15-23680.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.