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September 28, 2018 – Ranger Specialty Income Fund, LP (“Ranger Domestic”), Ranger Direct Lending Fund Trust (“Ranger Offshore”) and Ranger Alternative Management II, LP (collectively, “Ranger”), requested that the Court convert the Princeton Alternative Income Fund (“PAIF”) case from a Chapter 11 reorganization to Chapter 7 liquidation [Docket No. 335] and submitted a memorandum of law in support of that motion [Docket No. 335-1]. The conversion motion explains, “The Debtors have acknowledged that there will not be and cannot be any reorganization in the Bankruptcy Cases. The investment portfolio of PAIF, which consists of twelve credit lines, eight of which are in default and/or in bankruptcy and have been taken over by Debtors or an affiliated entity in wind-down mode, is in a state of liquidation. The funds which constitute this portfolio are comprised of investment dollars which PAIF obtained from investors, approximately 85% of which came from Ranger. The Debtors have also acknowledged that there are sufficient assets in the estate to pay all non-investor creditors in full. Thus, the investors are the only real economic parties in interest in the Bankruptcy Cases, since the assets in the estate may or may not be sufficient to pay them in full….After a brief extension of plan exclusivity by the Court at the request of the Debtors, the Court terminated plan exclusivity on August 13, 2018. The Debtors have not filed a chapter 11 plan as of the date of the filing of this Motion….As of the date of this Motion, Debtors have failed to produce any documents to Ranger in response to this discovery request, other than exact copies of redacted documents previously produced in the Arbitration….As of the date of the filing of this Motion, no audited financial statements have been submitted by the Debtors. Absent this information, Ranger and other creditors and investors have no reliable information as to the status and value of the assets of the estate and the status and value of the investor’s interests in the PAIF fund….Cause also exists for conversion under Section 1112(b) in a case in which no confirmable plan is in prospect, conflicts of interests exist which give insiders incentives to act against the best interest of creditors and administrative expenses continue to mount….Ranger has already suffered enough damage at the hands of PAIF and its Microbilt related masters….There is simply no reason for PAIF to be a debtor-in-possession other than to continue to maintain control and lack of transparency while it delays liquidation for its own reasons. To the detriment of Ranger and other investors.” The Court scheduled an October 22, 2018 hearing to consider the conversion motion.
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