Ritchie Capital sues fund investors

Ritchie Capital Management LLC sued investors who are trying to force one of its hedge funds into bankruptcy, claiming they disparaged the Lisle-based investment firm.

Comments made by the investors' bankruptcy counsel have made it more difficult for Ritchie to get top value as it liquidates fund holdings, according to a complaint filed in an Illinois state court.

Ritchie "filed this suit as a last resort to prevent further injury," the firm's attorneys said in a court filing dated Feb. 1. The firm seeks a court order barring the investors from making injurious remarks, plus unspecified money damages.

Investors in the Ritchie Multi-Strategy Global LLC fund who claim they're owed about $45 million asked the U.S. Bankruptcy Court in Chicago on Dec. 26 to find the fund bankrupt.

The investors' law firm, Chicago's Winston & Strawn, issued a press release the next day announcing the filing and pledging to investigate whether Ritchie Capital engaged in self-dealing as it liquidated the fund.

In the Feb. 1 complaint, lawyers for Ritchie assert confidentiality clauses in the fund's operating agreement prohibit public criticism of the fund and its management.

"The disparagement is nonsense," Winston & Strawn partner Jeff Marwil said Thursday. All of the details disclosed in the court filings were already publicly known, he said.

Ritchie has asked U.S. Bankruptcy Judge Susan Pierson Sonderby to reject the involuntary petition, arguing the fund is still paying its bills as they fall due.

The petitioning investors are Tacoma, Wash.-based Benchmark Plus Partners LLC and Sterling Low Volatility Fund QP, a unit of Cleveland-based National City Corp. Ritchie has more than 90 investors, it said in the complaint. Sonderby is expected to hear argument on the dismissal motion on Feb. 26.