Lynn Tilton’s bankrupt investment vehicle, Zohar III, should be taken over by a trustee because of the “debilitating and entrenched acrimony” between Tilton and Zohar’s creditors, a government watchdog that monitors corporate bankruptcies said yesterday in a court filing, Bloomberg News reported. The U.S. Trustee also cited Tilton’s “apparent conflicts of interest” and asked the judge overseeing Zohar’s bankruptcy to either install a trustee to run the company, or to appoint an examiner to investigate the funds. Tilton put Zohar III into bankruptcy last month to resolve lawsuits involving the structured debt vehicles she used to finance distressed companies. The acrimony between Zohar III and its creditors, including MBIA Insurance Corp. and Alvarez & Marsal Zohar Management LLC, is disrupting the bankruptcy case, Brya Keilson, a trial attorney with the U.S. Trustee’s Office, said in court papers.
