Delaware Chancery Court Permits Limited Partner in Defunct Hedge Fund Parkcentral Global to Obtain a List of Names and Addresses of Other Limited Partners in the Fund

In early 2008, plaintiff Brown Investment Management, L.P. (Brown) and its affiliates purchased an aggregate $16 million of limited partnership interests in defendant hedge fund Parkcentral Global, L.P. (Fund).  Despite the Fund’s representations that it would not invest more than five percent of its assets in any one of its investment strategies, and that it sought to preserve capital and garner returns comparable to long term equities, throughout 2008 the Fund suffered “catastrophic” losses, resulting in its collapse.  Brown’s lost its entire investment and the entire Parkcentral fund complex ceased to do business.  In 2009, following the commencement of a class action against the Fund in Texas, Brown requested a list of the Fund’s limited partners so that it could communicate with other limited partners about the collapse and their potential remedies.  When the Fund refused, Brown sued to compel disclosure under the Delaware limited partnership law.  The Delaware Court of Chancery ruled in favor of Brown, based on its reasoning that investors in Delaware business entities have a statutory right to access a list of their fellow investors and that Delaware public policy favors the prompt production of the list.  The Fund then appealed and sought a stay of execution of the Court’s disclosure order.  The Court refused to stay execution of its disclosure order.  We outline the background of the case and the Court’s reasoning.  Also, we discuss the 2002 decision of the Delaware Court of Chancery in Arbor Place L.P. v. Encore Opportunity Fund, L.L.C., which involved similar facts and legal questions in the context of a Delaware LLC.  In addition, we address whether, in the view of the Delaware courts, the privacy provisions of the Gramm-Leach-Bliley Act of 1999 preempt Delaware law regarding access by limited partners or members to the names and addresses of other limited partners or members of, respectively, Delaware LPs or LLCs.

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