Singer’s Elliott Spars With PE Firm Over Plan to Wind Down Fund
(Bloomberg) -- Paul Singer’s Elliott Investment Management Inc. and a Texas private equity firm are at another impasse, this time clashing over how to wind down an oil and gas fund that a judge said last month must be liquidated.
Elliott and Stronghold Investment Management have submitted competing proposals for Delaware Chancery Court Judge Bonnie David to consider, records show. The judge had ordered them to get together and present a plan for winding down two partnerships, one of which Stronghold — which ran the fund — says has 100 other investors.
The parties have butted heads on various parts of their proposals, including expenses, what can actually be sold and the bidding process, according to court filings. A spokesperson for Elliott declined to comment. Stronghold couldn’t be reached for comment.
The latest disagreement stems from a lawsuit Elliott filed in September accusing Stronghold of charging excessive expenses and reneging on an agreement to liquidate two partnerships known as Fund II. The Texas firm has denied the claims and touted strong returns it has delivered to Elliott.
Elliott, a renowned activist investor, first partnered with Stronghold in 2017 to buy and sell oil, gas and mineral interests. But the relationship soured in 2022, resulting in a settlement that required Stronghold to liquidate Fund II assets. In December, the Delaware judge concluded Stronghold breached that deal, but deferred to the firms to come up with a plan for winding down Fund II.
Elliott has, among other things, pushed back on letting Stronghold affiliates bid for assets, arguing such a move would depress prices by deterring other bidders and letting the Texas firm use its informational advantage to extract “unfair” terms, court filings show.
Stronghold denied wanting to enrich itself by letting affiliates bid, contending in court filings that purchases would be made on behalf of investors and that an increased number of bidders would maximize prices. The firm said it wouldn’t object to adding “safeguards” that would ensure a “conflict-free process.”
Elliott also demanded that Stronghold restrict expenses only to those related to the liquidation, according to court documents. Stronghold’s attorney warned in a filing that Elliott’s proposal would risk a “dire” situation, including leaving portfolio companies without necessary cash and “irreversibly decimating Stronghold’s operations and capabilities” through layoffs, “lapsed payments to vendors” and “stagnation of investment analytics.”
The parties also can’t agree on what should be sold. Stronghold, in court filings, said it is pushing for the sale of stakes in the holding companies that are invested in the oil and gas interests. Elliott is advocating for a sale of all underlying assets, records show.
Both parties have agreed that a special magistrate judge should oversee the sales process. But Elliott doesn’t want the judge to have the authority to allow other fund investors who want to remain invested roll over their interests into a new vehicle, arguing the agreement requires the complete sale of all assets, according to the court records.
Stronghold said a special magistrate “should have power to determine the ‘manner’ of sale, particularly where a ‘minority’ fund investor” like Elliott “seeks to force its exit on other” fund investors “who wish to see through strategies that have been in the works for years.”
Eller Associates v. SRP Capital Advisers, 2025-1095-BWD, Delaware Chancery Court.
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