Singer’s Elliott Wins Ruling Forcing PE Firm to Wind Down Fund

(Bloomberg) — Paul Singer’s Elliott Investment Management Inc. persuaded a judge to grant its request to liquidate an oil and gas fund as part of a legal battle with a Texas private equity firm that manages the assets.

Delaware Court of Chancery Judge Bonnie David ruled Friday that Stronghold Investment Management violated a previously signed settlement agreement with Elliott by failing to sell all assets by certain deadlines. The judge asked the parties to submit a proposal to terminate the two partnerships that managed Elliott’s investment.

The decision stems from a lawsuit filed in September in which Elliott accused Stronghold of overspending and breaching its contract by refusing to liquidate partnerships known as Fund II.

Stronghold warned that any liquidation would harm the other 100 investors because it would have to sell assets at a discount to meet “Elliott’s desire for short-term liquidity.” The Texas firm denied overpaying Elliott and argued it provided strong returns.

The judge said the prior agreement “did not permit Stronghold to indefinitely postpone all asset sales.” A lawyer for Stronghold stated that the firm intends to appeal the decision immediately.

Elliott, who gained fame as an activist investor, first invested in Stronghold in 2017 to put money into companies that buy and sell oil and gas stocks. However, the relationship broke down in 2022. Both sides blamed each other for this separation, which led to an agreement. That deal called for the sale of Elliott-related assets by the end of 2023 and an extension through 2024.

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