Ranger hit by Princeton bankruptcy – Ranger Direct Lending has announced that it has been informed that Princeton and the General Partner filed voluntary petitions of bankruptcy on 9 March 2018.
The filings came hours before the three-judge arbitration panel was to rule on an application for an order requiring Princeton to hold and segregate all revenues generated by its investment activities, pending further order of the panel. It was also expected that the first phase of the arbitration, focusing largely on Ranger’s demand for a redemption of its capital in Princeton, would finish its testimony phase on that day.
The bankruptcy petitions have the effect of staying this first phase of the arbitration as against Princeton and the General Partner and also stopping the ruling on the segregation order being delivered.
Ranger says that it is disappointed that the bankruptcy filing has stalled the first phase of the arbitration, but believes that the bankruptcy filing does give rise to potential benefits in the process of getting visibility into the Princeton Funds’ portfolio valuation and ultimately redeeming the investment it has made. Specifically, now that a bankruptcy petition has been made, the activities of Princeton and the General Partner will be monitored by a bankruptcy court.
More assets than liabilities?
Within its bankruptcy petition, Princeton represents that: (i) the estimated aggregate value of its assets is between US$50 million and US$100 million, and (ii) it has estimated liabilities of between US$1 million and US$10 million. Ranger expects that the filings that Princeton needs to make in relation to the bankruptcy proceedings (including schedules of assets and liabilities) will provide information on the portfolio. Ranger will evaluate such information and its impact on the net asset value, if applicable, as and when it is available. By way of a reminder, the 31 January 2018 cum-income net asset value assigned a value of approximately US$29.3 million (which is net of the loss reserve previously announced) to Ranger Direct Lending’s investment in Princeton and, so far as it is aware, its investment represents between 75% and 85% of the aggregate investments in Princeton.
As previously reported, the arbitration process includes a second phase consisting of claims against various individuals and entities (including MicroBilt) who, as specified in the claims, are alleged to have controlled the Princeton funds, and to have acted improperly in connection with its activities, or improperly benefitted from misconduct.
Although the bankruptcy filing may stay some of the claims in the second phase, the company intends to proceed with the second phase claims against the individuals and entities that are not subject to the bankruptcy stay. These claims continue to be conducted by the company’s attorneys on a contingency basis.
Further announcements will be made as and when additional information relating to the investment in Princeton becomes available.
RDL : Ranger hit by Princeton bankruptcy