Hand Over the Position

You own something you can't sell.

A loan to a company that's still operating but stopped paying. A private company stake with real assets but no buyer. A fund interest where the manager has gone quiet.

Sometimes there's no bid at all. Nobody cares. You send a deck around and nobody calls back.

Sometimes you do get a bid, and it's often "insulting" - pennies on the dollar.

So you say never mind. You hold on and hope for the best. Another year goes by and the position sits there with nobody working it.

We said it in Workout Speed Is a Trap and it still holds: hope is not a strategy.

The other kind of position

Not every position is a problem.

Some of them are doing well. A private loan that has paid on time for five years. A stake that has doubled. A handful of co-investments that, added together, beat most funds you could have bought.

Nobody knows. Not a future co-investor, not a bank, not your own family, because nobody has been keeping score. The returns are real, but if you ever want to raise money on them, a spreadsheet you update when you remember doesn't count.

Stuck or performing, the answer is the same. Put the position in a structure that someone runs properly.

Three ways to hand it over

Which one fits depends on how much work you want to do.

Appoint us and keep the position. You stay the owner. We're appointed by assignment or power of attorney, take legal and operational control of the file, and drive it to a result: a sale, a settlement, a restructure or a write-down. Title stays with you. The work comes from us. This suits a single stuck position where ownership matters to you.

A dedicated vehicle, managed by us. We can set up a special purpose vehicle for you, either around one position or around a whole portfolio of them, and manage it under a mandate written for your objectives. Nothing is pooled with anyone else. Every position is visible, and you get one set of reports instead of a folder per deal.

Run it like a fund. The position, or the portfolio, goes into its own segregated portfolio under our Cayman SPC as a subscription in kind, and you receive units. From then on it's run the way a fund is run. An independent administrator strikes the NAV, an independent auditor signs the accounts every year, and a custodian holds the assets. We covered how the structure works in When an SPC Is the Right Tool.

Why the track record matters

For a stuck position, running it like a fund forces discipline. There's a NAV every quarter whether the news is good or bad. The position can't sit forgotten, and nobody can quietly carry it at a number it stopped being worth years ago.

For a performing position, it does something more useful. It starts a track record.

A record with an independent NAV and audited accounts is one you can show people. If the returns hold, it's the basis for bringing in co-investors, or for turning a family strategy into a fund other people can invest in. That's what our fund platform exists for.

The record starts the day the position goes in. Nobody can audit the five good years that came before, so the sooner it goes in, the longer the record.

If you're holding more than one

Family offices rarely have just one. They have many, picked up over years: a co-investment a friend brought in, a vendor note from a sale that never fully paid, a couple of LP interests nobody tracks anymore. Some are stuck. Some are doing very well.

Each one has its own lawyer, its own half-updated spreadsheet and usually results in a random awkward let's catch up phone call. Nobody owns the whole picture, so nobody understands where the value is, what should be written off, and what deserves more capital.

Putting them in one vehicle fixes that. One report, one manager, accountable. The stuck positions get worked, and the ones that don't deserve the work get closed out.

What changes the day you sign

The other side stops dealing with you. A borrower who has spent three years managing your patience now deals with an institution with a process and a timeline. We wrote about why that works, especially when the borrower is someone you know, in When the Borrower Is a Friend.

The documents get read properly, or written if they never existed. We rebuild the capital structure the way we set out in Deconstructing the Cap Table, so we know what each position actually is before deciding what to do with it.

You get a single, consolidated report, not random, irregular phone calls.

What we won't take

If we can't get control of the resolution, or at least full visibility of it, we'll pass. Otherwise we'd be charging you to watch.

And if what you really want is a vehicle to park a position in so the mark looks better, we're the wrong people. The structure is there to run positions. It doesn't make any of them worth more.

The honest floor

Handing a position over doesn't create value. A vehicle is worth what's inside it, and the independent valuation may come in lower than the number you've been carrying.

Running a position like a fund means the numbers get checked. If the numbers are bad, the record will say so.

Illiquid stays illiquid. A vehicle holding a workout can't be unwound on notice. You get out when the position resolves, and not before.

Moving an asset into a vehicle can count as a disposal for tax where you live. Speak to your tax adviser before you sign anything.

All of this is for qualified, professional or sophisticated investors. We can't take positions from the general public.

Some positions turn out to be worth nothing. When that's the answer we'll tell you, and the better move may be to sell it to us for a dollar and take the loss cleanly.

If you're holding something nobody will pay for, or something nobody knows is working, send us the documents. We'll tell you which of the three fits, or whether none of them do.