Hedge Fund Failure Predictions and Strategies: How to Catch a Falling Knife and Not Get Cut


Predictions and Suggestions of Morrison & Foerster’s Hedge

Recovery/Defense Team.

Morrison & Foerster has formalized its multi-disciplinary team dedicated to responding to client service needs in the coming distress cycle for at-risk hedge funds and

structured debt vehicles. Representing “foreign representative” liquidators and investor/creditor

committees early in U.S. Chapter 15 bankruptcy cases, following the first round of failed funds’ filing

of offshore insolvency cases, has helped us appreciate the “game” to come. We are now also

helping prime brokers and bank creditors prepare their defensive and recovery strategies for what is

coming next, as we enter this serious, crash-risk period. As failed funds begin to liquidate their

portfolios, whether in the courts or outside of court and “below the radar,” our Team is also there to

support the buyers. The cross-border and multi-disciplinary nature of these issues requires a unified

Team of lawyers with relevant experience acquired from cross-border bankruptcy/restructuring, M&A, and litigation in prior down-cycles. Also relevant are practices for international tax and hedge fund formation and advisory practices, for distressed M&A, and for other specialties applicable to certain asset categories, such as credit default derivatives.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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