A new distressed-debt manager lost control of its flagship fund after top investors ousted it for business tactics they considered too aggressive, including conduct during a chapter 11 bankruptcy that resulted in court sanctions against the fund, WSJ Pro Bankruptcy reported. Austin, Texas-based Invictus Global Management has run a flagship $100 million distressed-debt fund that invests in struggling or bankrupt companies. It has been active in several major chapter 11 and litigation finance cases in the last four years, including the bankruptcies of Aeromexico, Latam Airlines and discount retailer Tuesday Morning. The fund’s two largest investors, Corbin Capital Partners and Gatewood Capital Partners, voted to remove Invictus as fund manager in September as Invictus faced litigation tied to its actions on Wall Street. Invictus was sanctioned by a Texas bankruptcy court in 2020 for spreading “false or misleading information” to creditors of Tuesday Morning, a bankrupt retailer that it tried and failed to acquire. Last year, the investment bank Jefferies Financial Group sued Invictus after Invictus agreed to buy $5 million of bankruptcy claims from the bank but backed out of the deal as the market value of the claims decreased, the investment bank said.
