Distressed-company investor Lynn Tilton lashed out at the Cayman Islands corporate directors who moved to block her attempt to force one of her debt-investing vehicles into bankruptcy, Dow Jones Newswires reported yesterday. She says the directors have ignored their duties to Zohar — a collateralized loan obligation, or CLO, fund — in favor of protecting the interests of the Cayman Islands, which is receptive to creators of sophisticated financial vehicles like Zohar-I. It is a conduit stuffed with loans to troubled companies, and the conduit itself is in trouble. It missed a payoff date in November and was bailed out by bond insurer MBIA Inc. Tilton, who was accused of fraud by the Securities and Exchange Commission in connection with her CLO operation, has denied wrongdoing and vowed to fight the charges. Now she is battling directors in the Cayman Islands, who have said her attempt to invoke bankruptcy protection for Zohar-I runs afoul of the agreements that created the specialized investment vehicle.
