Plainfield Asset Management is a hedge fund

Hedge fund

A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...

 that specializes in managing investment capital on behalf of institutions and high net worth individuals. The firm works with clients in the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 and abroad, and maintains offices in Stamford, Connecticut

Stamford, Connecticut

Stamford is a city in Fairfield County, Connecticut, United States. According to the 2010 census, the population of the city is 122,643, making it the fourth largest city in the state and the eighth largest city in New England...

 and Summit, New Jersey

Summit, New Jersey

Summit is a city in Union County, New Jersey, United States. At the 2010 United States Census, the city's population was 21,457. Summit had the 16th-highest per capita income in the state as of the 2000 Census....

. According to the firm’s website, Plainfield is a registered investment adviser with the United States Securities and Exchange Commission and is a QPAM for ERISA fiduciaries.

Plainfield was founded in 2005 by Max Holmes

Max Holmes

Max Holmes is the Founder and Chief Investment Officer of Plainfield Asset Management LLC, a hedge fund management company based in Stamford, Connecticut, which specializes in distressed, event and special situation investing.- Background :...

, the former Head of the Distressed Securities Group and a Managing Director of D. E. Shaw & Co., L.P.

Hedge Fund Lending

On June 8th, 2011 The New York Times ran an article discussing the trend of hedge funds lending money to businesses who have been unable to secure loans from traditional lenders. In the article, Max Holmes warns of the dangers hedge fund may find themselves in when engaging in this practice, “The new funds rushing into direct lending now will learn the hard way that it is easy to make what appear to be sound loans as the economy is improving, but it becomes brutal to either collect the loans or foreclose when the downturn comes.”

2008 performance

According to Fortune Magazine, “By the end of 2008, 93 percent of Plainfield's assets were illiquid -- and Plainfield was compelled to prevent investors from leaving.” In a subsequent article in Absolute Return, a Plainfield official explained that upon receiving significant redemptions, the firm created liquidating share classes for those investors who wanted their money back and reduced management fees on the liquidating assets.

Lending probes, exoneration

Plainfield Asset Management’s funds have lent money to numerous public and private businesses. During the last recession, Plainfield was required on certain occasions to assert creditors’ rights after loan defaults by borrowers. In a small number of cases, borrowers asserted counter-claims against Plainfield to delay foreclosure proceedings. To date, all of those counter-claims have either been settled or adjudicated in favor of Plainfield, with tribunals in some cases explicitly rejecting allegations of predatory lending. Two of these borrowers, notwithstanding their inability to prove their claims in civil proceedings, attempted to make criminal complaints to the Manhattan District Attorney’s Office. These same borrowers then leaked their complaints to Fortune Magazine, which published an article about it. The subsequent article in Absolute Return + Alpha

Absolute Return + Alpha

-Description:Absolute Return + Alpha was launched in September 2009, as a subsidiary of financial publisher Euromoney Institutional Investor. AR was formed when two magazines, Alpha and Absolute Return were combined. The magazine publishes both online and print content...

magazine revealed more of the story. Though these complaints were filed in 2009, no action has been taken against Plainfield and the Manhattan District Attorney’s office, as well as federal prosecutors who have looked into the same allegations, have closed their inquiries .