The hedge fund is best known for its role in the Toys R Us bankruptcy

Solus Alternative Asset Management faces a second straight year of high redemption levels. The distressed debt specialist has struggled due to bad investments in firms like Pacific Gas & Electric and Intelsat. According to the Financial Times, the hedge fund’s flagship fund has dropped by 9% this year. In 2018, the fund fell by 15%.

Solus Alternative Asset Management Faces New Pressure

Since November 2018, investors have pulled about $1.5 billion since November 2018. Today, total AUM sits around $4.3 billion. Ongoing bankruptcies, corporate collapses, and events like wildfires (in the case of PG&E) have hurt distressed funds.

Solus had also invested in a number of failing firms. These investments include PG&E, Intelsat, American coalminer Contura Energy, offshore drilling giant Hornbeck.

According to the Wall Street Journal, investors have requested at least $100 million before the end of their agreed-upon terms. FT reports that more investors are concerned that distressed hedge funds might “gate” funds and prevent redemptions for a period.

Finally, Blackstone Group is a part-owner in Solus Alternative Asset Management. The fund later became one of the big-time distressed investment companies after its battle with Blackstone-backed GSO Capital Partners over Toys R Us.

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