FX Concepts' Taylor says he's back, will manage funds again

NEW YORK Thu Jan 9, 2014 12:07pm EST

NEW YORK Jan 9 (Reuters) - Three months after FX Concepts filed for bankruptcy protection, its founder John Taylor said he will manage funds again and focus on technical and quantitative research for the company that once ranked as the world's largest currency hedge fund.

"The market is my home, not administration; I am back," Taylor said in a letter to clients dated Jan. 9.

"The newsletter business will be the primary business asset and livelihood of John R. Taylor as it was years ago."

In his letter, Taylor addressed FX Concepts' troubles for the first time since it filed for bankruptcy protection on Oct. 17. He has not responded to requests for interviews and sources said he is currently in the midst of negotiations with banks.

"Things have changed and are still changin' at FX Concepts where it is fair to say the world has been turned upside down," said Taylor. "FX Concepts filed Chapter 11 in October, an ignominious end for our company."

It was a drastic reversal for the company that at its peak in 2007 managed $14 billion in assets.

"It is difficult to operate without phones, e-mail addresses, or even business cards, but I have rented an office and we have Bloomberg, CQG (market data provider), and friends in the banking world giving us information galore," said Taylor.

He added that all of FX Concepts' assets have been sold except the newsletter and the research process surrounding it.

FX Concepts' so-called "intellectual assets" were sold to Ruby Commodities for $7.48 million in cash, court filings showed on Nov. 26.

An auction was held on Nov. 25 at FX Concepts' Park Avenue office for the sale of the bankrupt hedge fund's assets, consisting primarily of the firm's computer models, data and trademark.

Taylor said the sale of the assets to Ruby Commodities has yet to be finalized because its primary creditor, Credit Suisse, will not let the transaction close until it has a global agreement with Taylor and FX Concepts on the debt settlement.

"This has taken longer than our team would like, stalling our sales, collection, and communication with clients and prospects," he said.

PERSONAL GUARANTEE

Less than a year before FX Concepts filed for bankruptcy, Taylor personally guaranteed a part of the debt his firm owes to Asset Management Finance, a Credit Suisse unit that has invested in a number of hedge fund-management firms.

According to court documents, AMF provided $40 million in debt financing to FX Concepts through two revenue-sharing agreements in 2006 and 2010. But in December 2012, as earning opportunities in the currency market diminished and redemptions from the fund grew, Taylor had to renegotiate the financing.

The Credit Suisse unit agreed to defer eight quarterly revenue-sharing payments in exchange for Taylor's personal guarantee for those obligations.

As of Oct. 17, when the firm filed for Chapter 11, FX Concepts owed AMF $34 million, with Taylor guaranteeing $5 million of the total.

"I do believe there will be a settlement with Credit Suisse in the near future," Taylor said.

He added a new series of updated medium-term and intra-day models have been created and will be launched as soon as Credit Suisse gives FX Concepts the approval.