SEC Suit
A recent lawsuit shows the depth of the dispute; it seeks, on behalf of the Zohar funds, a declaration that shares in MD Helicopters Inc. and Vulcan Engineering Co. in fact belong to Zohar. It alleges that Tilton engaged in “self-dealing” by giving entities she controlled “20-year irrevocable proxies” to vote shares in the companies to Patriarch, which has since stepped down as a collateral manager, but which she still controls. The lawsuit says the proxy rights are “invalid.”
Tilton had been sued by the Securities and Exchange Commission, which alleged she had bilked investors of $200 million. Tilton was cleared in September, and absolved of separate civil racketeering allegations in a lawsuit brought by the Zohar funds.
When Tilton’s Patriarch previously petitioned to force the Zohar funds into bankruptcy in New York, MBIA ended up taking possession of Zohar I at an auction after facing off with Patriarch.
Zohar I and Zohar II have already defaulted, and Zohar III will likely default in March 2019, Tilton said. Zohar III Corp. and affiliates’ Chapter 11 filing in Delaware listed up to $10 billion in assets. Zohar I has $286.5 million in outstanding Class A debt, Zohar II has $760 million, and Zohar III has $791 million, according to the filing. Class B debt is also listed in the filings.
Mark Kirschner of Goldin Associates was named as chief restructuring officer for the funds. Bankruptcy counsel is Young Conaway Stargatt & Taylor.
The case is Zohar III Corp., 18-10512, U.S. Bankruptcy Court, District of Delaware (Delaware.)
This article was provided by Bloomberg News.