Bayou Receiver Launches Another Round Of Lawsuits

by Leroy Baker, for LawAndTax-News.com, New York

07 July 2006

Late last week, the Bayou Group of Hedge Funds filed another 25 lawsuits against former investors in receipt of alleged investment returns from the failed hedge funds.

The lawsuits seek to recover the entirety of the distributions made by the failed hedge funds, including principal and fictitious profits.

The lawsuits were commenced in connection with the Bayou Group of Hedge Funds' pending Chapter 11 cases.

Jeff J. Marwil, a partner at Jenner & Block LLP and the sole Managing Member of the Chapter 11 debtors, explained that "the intent and purpose of the lawsuits and these Chapter 11 cases is to make fair and equitable distributions to all creditors, and to undo the circumstances where certain investors received a return of principal and fictitious profits, while other investors lost everything".

He added that: "Equality of distribution is the goal."

Marwil was appointed by US District Judge Colleen McMahon in the Southern District of New York, in April. He has complete and exclusive control over all of the domestic, onshore Bayou entities’ assets.

Marwil's duties include the identification of Bayou creditors, the pursuit of legal actions for the benefit of defrauded investors, the marshalling of assets, and the eventual distribution of recovered sums to creditors, including defrauded investors.

It is alleged that almost since Bayou's inception in 1996, the funds operated as a massive financial sham and Ponzi scheme, in which investors were lured to invest approximately $450 million, subsequently pilfered by Bayou's founders.

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