Citadel and Goldman Sachs have not yet answered the complaint filed by Frederick J. Grede, trustee for the Sentinel Management Group’s bankruptcy, but that doesn’t mean he hasn’t been busy. This week Grede filed suit against Keefe, Bruyette & Woods Inc. (“KBW”) and Cohen & Company Securities LLC to recover $130 million from KBW and $150 million from Cohen.
This morning a U.S. bankruptcy judge approved a $10.7 million settlement between Sentinel Management Group Inc.’s bankruptcy trustee and Philip Bloom, Sentinel’s founder, and his son Eric Bloom, the firm’s CEO. The trustee, Fred Grede had initially sought $350 million recovery for Sentinel’s creditors.
“We think there are significantly more sources of recovery,” Grede said in a previous conversation. Grede has also filed suit against the Bank of New York Mellon and Sentinel’s accountants, and adds that there will be other lawsuits to recovery more of the Sentinel customer funds going forward.
The Bank of New York, has notably filed suit against the trustee.
For background on the case and details of the settlement and access to court documents, see posting:
Avarice in bloom.
Bloom et al have settled with Sentinel Management Group’s bankruptcy trustee Frederick J. Grede for $10.7 million, which, considering that the trustee was seeking $350 million, doesn’t’ seem like a lot of money.
According to the settlement, $10.7 million “represents substantially all the assets of the Settling Defendants, other than assets which are or are claimed to be exempt.” As a stipulation of the settlement, the defendants will not challenge bankruptcy petitions by or against Sentinel Investment Group (SIG), parent company, and waives interest in any tax refund due to SIG.
The news that Citadel Investment Group, a $14 billion hedge fund, had purchased $500 million of Sentinel Management Group’s distressed portfolio didn’t bring the joy the firm perhaps thought it would. Penson GHCO, a futures commission merchant, has demanded that the sale be reversed due to the loss Sentinel clients, thus Penson, would take. “Should the sale not be reversed,” a Penson press released stated, “based on what we currently know, we anticipate incurring a potential one-time after-tax loss of approximately $6.5 million on the Sentinel Investment.”
