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Kinetic Partners Expands New York Hedge Fund Insolvency Practice Expansion Due to Continued Increase in Distressed Hedge Fund Redemption Demand

Monday, June 27, 2011
Kinetic Partners, a professional services firm to the asset management community, announced that it has appointed three new professionals to its distressed hedge fund practice.

“We’re fortunate to have brought aboard these individuals who have the level of experience in both the restructuring and alternative investment sector as Trenton, Michael and Jenna have. They make an excellent addition to our growing hedge fund insolvency and liquidation practice.”

Trenton Acuff, Michael Bryant and Jenna Gordish are the newest additions to the firm’s rapidly growing Insolvency Practice and all three will be based in the firm’s New York office.

Kinetic Partners has seen its distressed funds’ team grow rapidly in recent times, as investors and managers continue to jostle over asset realizations within distressed and illiquid hedge funds resulting primarily from redemption demands dating back to the 2008 economic crisis. Total assets that could potentially be affected are estimated to be roughly $100 billion Several factors — including indefinite redemption suspensions, unsuccessful restructuring arrangements, ineffective wind-down strategies and, in some cases, public scrutiny over ongoing valuations — are prompting investors to become more aggressive in pursuing a return of value. The general extended rally in the markets has also increased investor desire to recoup investments in these distressed assets as they look to other investing opportunities. In addition to working with investors in these situations, Kinetic Partners is also advising managers of these illiquid funds as a means to providing a more structured and transparent process.

Trenton Acuff joins Kinetic Partners from FTI Consulting, where he advised clients on financial restructurings and forensic investigations. Michael Bryant joins from KPMG, where he worked on the financial audit, and risk and compliance teams. Jenna Gordish joins from PricewaterhouseCoopers, where she oversaw the development and stress testing of auditing procedures in an area of significant risk for alternative investment managers.

“In the first two quarters of 2011, we’ve seen a number of investors become focused on pursuing redemptions requests that were initiated in the fall of 2008 but have yet to been fully satisfied,” said Geoff Varga, Member at Kinetic Partners, who leads the firm’s distressed funds practice. “At the onset of the crisis in 2008 and in an effort to facilitate the stable liquidations of portfolios, many funds implemented gates or suspended redemptions that were expected to be completed over the ensuring two to three years . That time has now come and gone and for those funds that have not met those objectives, it is unlikely that investors will be willing to give managers further time without outside assistance or a definitive plan.

“Consequently, we anticipate that there will be an increasing trend during the latter half of this year of investors looking to scale up their efforts to redeem their invested money. We are also seeing a number of managers of these illiquid funds come to the conclusion that realization efforts must be revamped, including the engagement of advisors like ourselves, to bring additional workout experience and transparency to the process.” Varga added, “We’re fortunate to have brought aboard these individuals who have the level of experience in both the restructuring and alternative investment sector as Trenton, Michael and Jenna have. They make an excellent addition to our growing hedge fund insolvency and liquidation practice.”

(press release)

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