Black Diamond Capital Management has won a bankruptcy auction for “substantially all” of the assets of GSC Group, once a powerhouse in the private debt universe that peaked with $28 billion of assets under management.
Black Diamond won the auction with a bid of $235 million. The sale still needs final approval from bankruptcy court, which could come in a hearing in December.
The firm, which has offices in Connecticut and Illinois, is buying a slew of funds that cover a variety of debt strategies, including mezzanine, collateralised debt obligations and distressed investments. The combined assets have about $8 billion of assets under management.
GSC founder Alfred Eckert will be joining Black Diamond as a strategic advisor and GSC’s president, Peter Frank, will join as senior managing director. Other GSC employees are expected to join the firm as well.
GSC filed for bankruptcy in August citing a “lack of liquidity in the credit markets”, “declining asset values” and a “deterioration in investor relations”. Eckert founded the firm in 1994 as a subsidiary of Travelers Group. The firm was originally called Greenwich Street Capital Partners and changed to GSC in 1999.
As the credit markets dissolved in 2008, the firm’s funds struggled, especially its funds invested in collateralised debt obligations, and GSC resigned as the manager of certain funds and opted for early termination of other funds.
Black Diamond was founded in 1995 and manages about $6 billion.