Hedge Fund Tries to Force Allied Bankruptcy

Peg Brickley
Dow Jones, Daily Bankruptcy Review
May 18, 2012

Hedge funds owed nearly $53 million have moved to push Allied Systems Holdings Inc. into an involuntary bankruptcy case, a remedy for what they said are improper moves by owner Yucaipa Cos.

Affiliates of Black Diamond Capital Management, LLC and Spectrum Investment Partners LP asked the U.S. Bankruptcy Court in Wilmington, Del., to move promptly to appoint a trustee to run the company on the alleged grounds it is being "grossly mismanaged."

Atlanta's Allied Systems Holdings specializes in the delivery of new vehicles from car manufacturers to dealerships. John Blount, chief administrative officer and general counsel of the company, Friday said "rogue lenders" were behind the involuntary bankruptcy petition, which had its roots in a running legal battle between the hedge funds and Yucaipa. Most lenders are supportive of the company, and it has adequate liquidity to continue business as usual, Blount said.

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