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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.
Business Insider has reached out to MBIA for comment on Tilton's statement and will update this post if we hear back.
Two credit funds, Zohar II and Zohar III, are not part of the Chapter 11 filing, according to the statement, and they will not be subject to any cross-defaults.
Law firm Skadden, Arps, Slate, Meagher & Flom and financial advisor Moelis & Co are advising Patriarch Partners on the restructuring.
The Chapter 11 filing of a key credit fund that supported some of her private equity firm's investments comes at a bad time for Tilton.
She is being sued by her investors in the Zohar funds, who claimed they were misled about their accounting standards.
She's also being sued by the Securities and Exchange Commission, which charged her with fraud for allegedly hiding poor performance in her debt funds.