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Black Diamond Purchase of GSC Assets Approved by Judge

Black Diamond Capital Management LLC won court permission to buy assets of GSC Group Inc., an investment-management firm in bankruptcy.

U.S. Bankruptcy Judge Arthur Gonzalez approved the sale in a decision filed today in Manhattan. A lender group that included UBS AG and Credit Agricole SA opposed the sale and sought a separate restructuring of the Florham, New Jersey-based company.

“The debtors extensively marketed the assets” and chose the best bid after an auction, Gonzalez wrote in the order. The bid fully satisfies a $253.5 million senior secured claim, and includes a $6.7 million promissory note and $5 million in cash, according to the court order.

GSC, founded by former Goldman Sachs Group Inc. partner Alfred Eckert III, filed for bankruptcy last year. It had about $8.4 billion of assets under management as of March 2010, according to court papers.

After the bankruptcy filing, GSC agreed to sell its investment-management business to lender Black Diamond. UBS and other lenders fought the deal and persuaded Gonzalez to appoint a trustee to take over the business.

The trustee, James Garrity, then proposed a new deal in which GSC’s assets would be sold to Black Diamond as part of two sale agreements worth about $275 million to GSC, according to court papers.

The sale gives Black Diamond a windfall at the expense of other creditors, the lender group said. It proposed a plan that would have given lenders ownership of GSC.

The case is In re GSC Group Inc., 10-14653, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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