The judge ruled in favor of Louisiana’s Firefighters' Retirement System, Municipal Employees' Retirement System and New Orleans Firefighters' Pension and Relief Fund, which petitioned for the liquidation after almost a year of failed negotiations to return about $145 million of their original investments and earnings, according to The Times-Picayune.
The hedge fund in question, the Income Arbitrage Fund Ltd., is an investment company based in the Cayman Islands. It is the flagship fund of Fletcher Asset Management, run by Alphonse Fletcher Jr., the news report said. The judge found the hedge fund was insolvent and should be wound down.
The Times-Picayune reports the petition made the case that liquidators should investigate the company's affairs and take control of its assets, citing as examples of disarray the Income Arbitrage Fund Ltd.'s failure to file audited accounts since 2008, and its apparent lack of directors for two months beginning in November. Earlier this year, trustees of the state firefighters' system set aside $8.5 million as a precautionary measure to cover potential losses stemming from the Fletcher investment.