(Bloomberg) -- Advisers tasked with shutting-down Weiss Multi-Strategy Advisers LLC want an independent review of nearly $30 million in employee bonuses that are subject to a legal dispute with the hedge fund’s primary creditor, Jefferies Financial Group.
Weiss said in a Monday court filing that an outside-review “will provide transparency and clarity” on whether the bonuses were paid to its employees in the ordinary course of its business, as the firm contends. But such an examination could also review the merits of Jefferies’ claim that the bonuses should be clawed back in bankruptcy, Weiss said.
The bonuses were paid in February, weeks before the New York-based investment manager said it was shuttering and returning capital. Weiss, which owes various Jefferies affiliates about $100 million, has said the bonuses were consistent with annual compensation it provided employees since at least 2020.
“Resolving this issue quickly and early in these Chapter 11 Cases will benefit the Debtors’ estates, and likely provide a more streamlined and efficient process for the confirmation of any plan,” Weiss said in Monday’s court filing.
Bankrupt companies, or firms they owe money to, can request that a bankruptcy judge appoint an independent examiner to review disputes. Weiss previously sued to recover $20 million from Jefferies, alleging the firm and its founder, George Weiss, were compelled under the threat of litigation to sign the forbearance pact prior to bankruptcy.
Jefferies has denied Weiss’s claims and sued George Weiss after his companies sought court protection, claiming the founder personally guaranteed the debt that’s in dispute. George Weiss’s lawyer has previously said the validity of the forbearance agreement is being challenged in bankruptcy court and that his client never agreed to guarantee payment of Jefferies’ debt.
The case is Weiss Multi-Strategy Advisers LLC, 24-10743, US Bankruptcy Court for the Southern District of New York (Manhattan).
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