Markets
Greylock Files for Bankruptcy After Losses Spur Withdrawals
By and- Hedge fund plans to lower costs, restructure its debt
- Greylock is known for investing in troubled sovereign debt
Greylock Capital Associates filed for bankruptcy protection in New York as investors pulled money from the hedge fund following three consecutive years of losses.
The Chapter 11 proceedings will allow Greylock to restructure its debt and terminate its Madison Avenue office lease in Manhattan, according to a Jan. 31 filing signed by Chief Financial Officer David Steltzer.
Assets under management at the emerging markets hedge fund -- which more than halved since 2017 to $450 million at the end of 2020 -- will drop by $100 million by the end of March in the absence of new investments, according to the filing.
Greylock has cut its staff to nine people from 21 three years ago, and is in talks with its remaining major investors, confident that the business can “successfully reorganize and continue as a going concern” after the bankruptcy, Steltzer wrote. The firm hasn’t hired any financial or business consultants.
The firm has no plans to shut down, according to a message from Greylock President Ajata “AJ” Mediratta. The hedge fund opened a small office in Stamford, Connecticut last year to make it easier for the firm’s commuters, reducing the need for a large office in midtown Manhattan.
Distressed Debt
Greylock, founded in 2004 according to the filing and led by Chief Executive Officer Hans Humes, is known for making bets on distressed debt and troubled sovereign bonds. It was one of the funds that negotiated the Greek government’s debt restructuring, according to its website.
The fund struggled last year as emerging market bond prices cratered at the start of the pandemic. Creditors took haircuts in Ecuador and Argentina, and Venezuelan and Lebanese sovereign bonds also slipped as the countries have yet to resolve their defaults.
Greylock filed for Chapter 11 protection under the Subchapter V provision, which was introduced last year to make the bankruptcy process cheaper and easier for small companies.
The case is Greylock Capital Associates LLC, 21-22063, U.S. Bankruptcy Court, Southern District of New York.
— With assistance by Antonio Vanuzzo, Nishant Kumar, Ben Bartenstein, and Katia Porzecanski
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