Simmons and Ogier act on AbCap restructuring dispute

Simmons & Simmons and offshore firm Ogier have landed lead roles on a dispute between beleaguered hedge fund Absoute Capital (AbCap) and a group of its investors.

Simmons is advising an action group of AbCap investors who are disillusioned with the AIM-listed company’s proposals for restructuring some of its illiquid funds.

Following the shock departure of the company’s co-founder Florian Homm last month, the company asked investors not to withdraw their money for another year while it set up “side-pocket” funds into which it would put illiquid holdings.

This particular point is troublesome for the action group, said financial litigation partner William Rodger at Simmons, who is leading for the investors.

Rodger told The Lawyer that AbCap has told investors it will consider that if no more than two-thirds of them consent, it will deem the proposals to have been passed. “It has also said that silence on behalf of any investors will be deemed consent. And there are obvious questions over the legal validity of that,” said Rodger.

The action group are also unhappy over the particular restructuring plans that AbCap has proposed. It is still unclear what future plan they would prefer, as the group is currently encouraging more investors to come forward so they can present an alternative strategy to AbCap management.

Ogier is advising the company on the matter. It is also representing AbCap in a related suit filed against it in the Cayman Islands by a US investor.

AbCap, which is Mallorca-based but managed out of London, was admitted to AIM in 2006. On its listing it turned to Burges Salmon.