| NEW YORK, June 26
NEW YORK, June 26 "Vulture" firm
MatlinPatterson LP is set to close on a new private equity fund
of about $5 billion to buy distressed companies, making it one
of the largest such funds, a source close to the matter said on
MatlinPatterson, founded by veteran distressed debt
specialists David Matlin, Mark Patterson and Lap Chan,
originally sought to raise some $3.5 billion for the firm's
But demand for the fund exceeded supply and it was
oversubscribed by $1.5 billion, the source said, reflecting
some experts' views there will be many more opportunities to
invest profitably in debt-strapped companies over the next few
MatlinPatterson seeks to buy controlling stakes in
companies in financial straits on a global basis, often by
buying publicly traded debt and converting it to equity stakes,
either in or out of bankruptcy court.
The firm disclosed on Tuesday that it agreed to sell one of
its longest-held investments, chemical maker Huntsman Corp.
(HUN.N), to Basell BASL.UL, which is owned by privately held U.S. industrial group Access Industries. MatlinPatterson and
the founding Huntsman family held 57 percent of Huntsman common
The firm is also considering a major investment into
Italian airline Alitalia AZPIa.MI.
MatlinPatterson declined to comment.
The fund-raising comes at a time when many experts in the
restructuring advisory business -- lawyers, bankers and
consultants -- forecast a rise in the number of corporate
bankruptcies. This would provide more opportunities to firms
such as MatlinPatterson, W.L. Ross & Co., Cerberus Capital
Management and others, commonly know as "vulture" firms because
they look to invest in companies facing serious problems.
But the numbers of debt defaults and bankruptcies remained
stubbornly low due to wide availability of cash for distressed
companies to refinance debt, much of it from hedge fund
"I don't see any upturn (in Chapter 11 bankruptcies) yet,"
said UCLA law professor Lynn LoPucki, a noted bankruptcy
expert. "It goes on as long as there is a wash of money out