Financier Lynn Tilton on Sunday placed the Zohar investment funds she created under chapter 11 bankruptcy protection, a maneuver designed to quell lawsuits over her collection of distressed companies and realize their full value, WSJ Pro Bankruptcy reported. Structured as collateralized loan obligations, the three Zohar funds were created by Tilton to finance her private-equity empire but are now locked in several lawsuits with her over loans made to troubled companies in her portfolio. Tilton said in a sworn declaration filed yesterday with the U.S. Bankruptcy Court in Wilmington, Del., that she planned to use the chapter 11 process to sell the underlying portfolio companies or refinance their obligations to the Zohar funds. The companies, she said, are worth more than the roughly $2.4 billion owed to investors in Zohar I, Zohar II and Zohar III. But the cloud of legal uncertainty has turned off potential buyers and lenders and kept their value tied up in the courts, according to her bankruptcy documents.
