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BSF Recovers over $270 Million for client HRO Hub Fund

August 16, 2007

Download: HRO Decision (PDF, 558.26 K)

ARMONK, NY - August 16, 2007 - The law firm of Boies, Schiller & Flexner LLP recently concluded its successful representation of the High Risk Opportunities Hub Fund Ltd. (in liquidation), which resulted in the recovery of over $270 million and a recovery rate of almost 75% of the creditors' claims against the Fund. 

The Fund was a Cayman Islands hedge fund with a large portfolio of derivative securities, which was forced into liquidation in the aftermath of the Russian currency crisis of 1998.  The Fund had effectively taken long positions in the Russian equivalent of treasury bills (betting that the value of those instruments would increase) and had hedged those investments by shorting the Ruble (betting that the value of the Ruble would decrease).  When, in 1998, the Russian government announced the restructuring of its debt and the revaluation of its currency, both the debt instruments and the Ruble declined in value.  The Fund faced substantial margin calls on its positions in Russian debt and made substantial margin calls on its Ruble currency contracts.  Several of the Fund's currency counterparties refused to meet the margin calls, invoking contractual provisions that they claimed relieved them of those obligations as a result of the Russian currency revaluation.  The Fund was thereafter forced into liquidation and its positions were terminated. 

The liquidators of the Fund (Kroll (Cayman) Limited) engaged Boies, Schiller & Flexner to recover money owed to the Fund by several counterparties.  Boies, Schiller & Flexner pursued the Fund's claims aggressively and ultimately filed suit against two counterparties, asserting claims for the termination value of the Ruble transactions as well as for the profits lost to the Fund as a result of its being forced into liquidation.  Boies, Schiller & Flexner litigated the Fund's termination value claim to a successful judgment, obtaining the only opinion in the United States interpreting the Market Quotation close-out provisions of the ISDA Master Swap Agreement.  The claim was resolved prior to the issuance of a decision by the appellate court.  Boies, Schiller & Flexner leveraged its prosecution of these claims in settlements with the Fund's other counterparties - for a total recovery of over $270 million, providing the Fund's creditors a 74% recovery rate on their claims against the Fund.  The Liquidators were represented by Robin Henry, Motty Shulman and Daniel Holloway. 

The Court's decision can be accessed by clinking onto the "HRO Decision" link below.

Boies, Schiller & Flexner LLP, founded in 1997, has become one of the nation's premier law firms.  It has approximately 240 lawyers in offices located in New York, Washington, D.C., California, Florida, New Hampshire and Las Vegas. Best known for landmark cases such as United States v. Microsoft, Bush v. Gore, and In re Vitamins, the firm represents some of the largest and most sophisticated organizations in the world in their most important matters. The firm has been described by The Wall Street Journal as a "national litigation powerhouse" and by the National Law Journal as "unafraid to venture into controversial" and "high risk" matters.


Related Lawyers: Robin A. Henry, Motty Shulman,

Download: HRO Decision (PDF, 558.26 K)