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Bailey McCann, Opalesque New York:

Highland Capital Management LP has filed for bankruptcy ahead of a potential judgment in favor of investors in Highland's shuttered Crusader fund, according to court filings.

Highland decided to unwind Crusader in 2008 after taking heavy losses on high-risk loans. The firm created a distribution plan approved by most investors to return the remaining capital in the fund. However, a group of investors sued the firm in 2016 claiming that Highland failed to return their money and was taking fees it wasn't entitled to. Highland disputes that claim and says in its bankruptcy filing that it doesn't have enough cash on hand to pay what is outstanding. Highland owes the investor group approximately $189 million, according to court documents.

Patrick Daugherty, a former Highland portfolio-manager, who has been in an ongoing legal battle with Highland co-founder Jim Dondero, is listed as the second-largest creditor with an $11.7 million claim, according to the filing.

Highland Capital Management LP is an investment unit within Highland and no other parts of the business are included in the bankruptcy filing. According to a Bloomberg piece, business operations at Highland are expected to continue while the filing and the lawsuit work their way through the courts. Highland manages mutual funds a......................

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