Recent market volatility and financial market dislocations arising from COVID-19 have led to an increase in fund closings and as historical trends demonstrate, securities cases tend to surge around instances of crisis and stock market turbulence. Fund managers and directors are then often left with several important tasks to fulfill, and because not all fund closures are alike, understanding the various elements of a fund wind-down have become increasingly important for managers and investors in today’s day and age.

As investors continue to watch market activity in the coming months, evaluating buyout services will be crucial for all fund managers weighing their options. Funds can be shut down for a variety of reasons: liquidation related to fixed-term funds with designated termination dates, redemptions by large investors, under-performance or even departures of key personnel. While the decision to wind down is never easy, there are some key challenges of the liquidating process that cannot be overlooked:

• Administrative burden – Managers and directors need to develop the necessary actionable steps to manage the winddown of the portfolio, the infrastructure of the fund, and the manager itself. The approach to the portfolio wind-down needs to consider investors’ expectations, valuation, potential tax issues, regulatory requirements and operating expenses during the wind-down period.
• Issues of illiquid assets – Each individual asset needs to be analyzed from both a duration and liquidity perspective and assessed for issues associated with the realization timeline that maximizes value.
• Fiduciary responsibility – Fiduciary duties continue throughout the process to monetize investments and return investors their capital. A class action lawsuit can take years to finally be resolved, therefore the manager and directors are responsible to file claims on behalf of their investors even after the fund has closed.

While time-consuming, securities class action claims can bring meaningful value for a fund in any stage of its existence, even ones that have decided to close or are in liquidation. Buyout services can help funds realize the value in the present for settlement recoveries that may never materialize or take years to disburse by helping firms to manage their liquidating fund’s securities class action claims. With minimal effort and no future obligations, buyout services offer fund managers an efficient way to return maximum capital and meet fiduciary obligations.

For fund managers without the time to devote to resolving a class action lawsuit, FRT Future Claims Recovery can do a quick analysis of your transaction data and make an offer for the rights to file and collect recoveries for all future claims. By accepting the offer, a check is cut and any potential operational burdens from receiving class action recoveries in the future are eliminated.

Whether a firm ultimately decides to receive more immediate compensation for settlement recoveries or decides to keep direct involvement in the claims process, there is no doubt that over the course of the next few months we will continue to see an increase in the number of securities cases.

Learn More

Interested in learning more about how FRT helps institutional investors identify eligibility, file claims and collect funds made available in securities class action settlements and litigations impacting global investors? Contact us at learnmore@frtservices.com.

• Webinar
  • [ On-Demand Webinar ] Securities Class Action Claims Purchasing: The What, How and Why of Monetizing an Expiring Asset
  • [ Transcript ] Securities Class Action Claims Purchasing: The What, How and Why of Monetizing an Expiring Asset
• Whitepapers
  • Analyzing Offers for Non-U.S. Securities Claims
  • FRT’s Future Claims Recovery Program