Embattled investor Lynn Tilton defended herself in a Delaware court on Wednesday against allegations that she had not disclosed the complex holdings of $2.5 billion distressed debt funds that she lost control of this year, Reuters reported yesterday. The flamboyant Tilton testified for five hours about complex loan vehicles known as the Zohar funds that she created more than a decade ago. The funds have financed her investments in ailing companies such as Dura Automotive Systems, earning her the title of "Diva of Distressed." However, after one of the three Zohar funds defaulted, Tilton's Patriarch Partners investment firm stepped down as the collateral manager and was replaced by restructuring firm Alvarez & Marsal in March. In April, A&M sued Patriarch to get access to documents on the Zohar collateral. Tilton testified in Delaware's Court of Chancery that A&M had all the documents it needed. She said some Zohar holdings included the equity of borrowers, and those borrowers were also companies in the Patriarch Partners portfolio. Tilton said that the Zohar funds did not have to provide stockholding details to A&M, because she retained control over the equity.
