Singer’s Elliott Wins Ruling Forcing PE Firm to Wind Down Fund
(Bloomberg) -- Paul Singer’s Elliott Investment Management Inc. convinced a judge to grant its request to liquidate an oil and gas fund as part of a legal fight with a Texas private equity firm managing the assets.
Delaware Chancery Court Judge Bonnie David ruled Friday that Stronghold Investment Management breached an earlier settlement agreement struck with Elliott by failing to sell all assets by certain deadlines. The judge asked the parties to come up with a proposal for winding down the two partnerships that manage Elliott’s investment.
The decision stems from a lawsuit Elliott filed in September accusing Stronghold of charging excessive expenses and breaching its contract by refusing to liquidate the partnerships, which are known as Fund II.
Stronghold warned any liquidation would hurt 100 other investors because it would have to sell assets at a discount to satisfy “Elliott’s desire for short-term liquidity.” The Texas firm has denied that it overcharged Elliott and argued it has delivered strong returns.
The judge said the earlier agreement “does not permit Stronghold to delay all asset sales indefinitely.” An attorney for Stronghold indicated the firm would like to immediately appeal the ruling.
Elliott, which has built a reputation as an activist investor, first invested with Stronghold in 2017 to put money into companies that buy and sell oil and gas interests. But the relationship soured in 2022. Both sides blamed each other for the breakdown, which led to a settlement. That agreement called for selling Elliott-related assets by the end of 2023, with a possible extension through 2024.
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