Hedge funds such as GoldenTree warn investors in offering documents that they have the right to pay investors back “in kind” not cash. However, such payments in kind have been highly unusual until the current credit crisis, which has led hedge funds to place a variety of restrictions on investors trying to pull out their money.
GoldenTree, which specialises in investing in complex debt instruments, had about $10bn under management last year. But losses and redemptions could leave it with half as much if investors made good on withdrawal requests, said a person with direct knowledge of the matter. GoldenTree declined to comment.
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