Perry Capital LLC was sued by Solus Alternative Asset Management LP over allegations the hedge fund firm made a “willful breach of its obligations” to sell its share of $195 million in claims in Bernard Madoff’s estate.
Perry agreed to the trade over the telephone and with “instant messages” that are part of Bloomberg LP’s communications systems for clients, Solus said in a complaint in New York state court in Manhattan. Solus is seeking $20 million in damages.
Perry bought a participation in the claims from a unit of Deutsche Bank AG, Solus said in its complaint. With the unit’s help, the two hedge fund firms were ready to close the trade by early June, Solus said.
“Despite repeated demands by Solus since early June, Perry Capital has refused to honor the binding contract,” Solus said in its July 3 filing. “Suffering a case of seller’s remorse, Perry Capital went radio silent and told its lawyers to put pens down.”
Mike Neus, general counsel at New York-based Perry, didn’t immediately return messages yesterday seeking comment on the lawsuit.
The fight between the hedge fund firms comes as prices for claims on the con man’s estate have climbed to as much as 68 cents on the dollar, from the low 60s. Traders have “a sense that things are being resolved” in the long-running case, said Joseph Sarachek, managing director of claims trading at CRT Capital Group LLC, which buys and sells distressed debt, including that of the Madoff brokerage.
$9 billion Raised
Court challenges had been tying up most of the $9 billion that trustee Irving Picard has raised to pay claims, mostly through settlements. Last month, a lawyer said his client, Adele Fox, wouldn’t continue to challenge the Jeffry Picower estate’s forfeiture of $5 billion to Madoff’s estate and more than $2 billion to the U.S., and the U.S. Supreme Court refused to hear an appeal over Picard’s payment formula, freeing up a $2.3 billion customer fund.
Richard Perry founded his hedge fund firm in November 1988, after previously working at Goldman Sachs Group Inc. A so-called event-driven manager, he trades stocks and debt of companies involved in mergers and spinoffs and those emerging from bankruptcy.
Solus, led by Christopher Pucillo, also specializes in “event and credit-related” investments and manages $2.5 billion in assets, the New York-based firm said in a February statement.
Picard has paid investors about $333 million in the 3 1/2 years since Madoff’s 2008 arrest while charging $273 million for his firm’s work. Madoff is serving a 150-year prison sentence.
The Solus case is Solus v. Perry Corp., 652341/2012, Supreme Court of New York (Manhattan.)