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It what has become the latest travesty of the global credit crunch, Sentinel Management Group has filed for bankruptcy. Sentinel, a firm valued at $1.5 billion, handled cash for investors. It has now become another casualty of the market’s credit problems.
Filing for bankruptcy on Friday, Sentinel listed between 200 and 999 different creditors according to legal documents. Firms having the largest unsecured claims included Stone Capital Group Inc. and Fortis Clearing America LLC. Two other funds were also listed: those run by BC Capital Management.
Sentinel clients included a number of hedge funds as well as commodity and currency traders. The company also oversaw cash handling by wealthy individuals and investors as well. The company decided to prohibit redemptions by their clients at the beginning of August in an attempt to avoid selling deep-discounted securities. Such a move sparked concern in the credit market. It also brought concern that cash-management companies like Sentinel, which are believed to be safe investments, are now also struggling from the credit-crunch of the market.
Last week Sentinel sold positions to Citadel Investment Group, who manages hedge funds, for $312 million. It was indicated that the sell was accomplished at a discount of almost 30%, though it was demanded that the transaction be undone.
Also disturbing is that Sentinel has been sued by other clients, such as Farr Financial, which has indicated to Sentinel that if the firm didn’t return their cash investments, it would likely jeopardize their business.
08:15
Posted on Aug-23-2007
