Hedge fund manager Basis Capital has filed for bankruptcy protection for its Grand Cayman-based Basis Yield Alpha Fund.
Bloomberg reported that in a petition filed in New York this week, the Sydney-based firm had applied to a court in the Cayman Islands for permission to liquidate its assets.
Basis Capital, founded in 1999 by Stuart Fowler and Steve Howell, had more than $1 billion in assets as recently as May. Earlier this month the group advised investors that losses in the Alpha Fund could reach more than 80 per cent of assets.
Basis Yield, incorporated in 2005, invested in high-yield corporate and structured credit securities, including mortgage- backed bonds and collateralised-debt obligations, according to court documents.
Reportedly a spate of margin calls, which the fund could not meet, led to the initial fall in the value of investments and the resultant issuing of default notices by parties looking to close out trades or seize assets.
In July, Basis Capital hired Blackstone Group in an attempt to avoid the undervalued sale of its assets.
