A fund led by 'Diva of Distressed' Lynn Tilton has filed for bankruptcy
The fund, which is structured as a collateralized loan obligation, or CLO, issued notes to investors and used the proceeds to make loans to companies owned by Tilton's Patriarch Partners.
In a statement, Tilton blamed investor MBIA for refusing to extend the fund's deadlines.
"We did not make this decision to file Zohar I for Chapter 11 protection lightly and have done so only after numerous good faith attempts to accomplish a fair and transparent restructuring of Zohar I with MBIA outside of court," Tilton said in the statement.
Patriarch spent more than $100 million to buy out a Zohar 1 noteholder that MBIA had indicated was an "impediment" to an extension, according to the statement. MBIA still refused to agree to an extension however.
Tilton said: "Our decision to file Zohar I for bankruptcy and to seek court approval for a plan of reorganization that will pay MBIA in full, while maximizing value for Patriarch, only emerged when it became clear that MBIA had acted in bad faith throughout our discussions.