Sentinel Management Group Inc., a cash-management firm, who froze client withdrawals on Tuesday, filed for bankruptcy after a federal judge blocked it from selling assets to Citadel Investment Group.
Illinois-based firm, which managed about $1.6 billion of assets, said while filing in the bankruptcy court Illinois that board decision is in the best interests of the corporation, its creditors and other interested parties that a voluntary petition be filed; in an effort to restructure the indebtedness of the corporation.
Row start when Sentinel stopped the withdrawals on Aug. 14, and in reversal two of its customers, Farr Financial Inc. and Velocity Futures, filled a petition to block the transaction. They had accused cash-management firm to selling investors’ assets at below-market rates. Both irked customers accusing Sentinel to selling asserts on 15% discount and also worried that the assets may have already been sold.
However Sentinel is firm on its stand and asserts that the Chapter 11 bankruptcy filing will allow firm to restructure its debt, lists both assets and liabilities in excess of $100 million.
On its froze withdrawals decision Sentinel said that board took a decision after facing turmoil in the credit markets and it made impossible to trade without incurring losses. The threats of legal action from the firm’s clients may indicate a flurry of lawsuits across the industry, as asset managers battered by market declines are forced to unload holdings at fire-sale prices.
Via: yahoo
