Investment Bank Ledgemont Capital Files for Chapter 7 Bankruptcy
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Investment Bank Ledgemont Capital Files for Chapter 7 Bankruptcy

May 10, 2013


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Ledgemont Capital Group LLC, an investment bank based in New York, is filing for Chapter 7 bankruptcy in an effort to sell its assets, according to a report from Reuters.

Sources say the bank, which has assets worth up to $50 million, was crippled by a failed attempt to invest in FriendFinder Networks Inc., the company that owns the adult magazine Penthouse.

According to reports, Ledgemont and the Russian investment firm Renaissance Capital attempted to underwrite a $460 million initial public offering for FriendFinder Networks in 2008.

But sources say this potentially lucrative plan was "scuttled" by unforeseen circumstances, and FriendFinders eventually went public in 2011 with the aid of two other investment groups, Imperial Capital and Ladenburg Thalmann.

The company, which holds between $1 million and $10 million in debt, never recovered from this lost opportunity, which led to the bankruptcy filing earlier this month.

Sources note that the bankruptcy court has already appointed a trustee to handle Ledgemont’s case. The trustee will be tasked with identifying the bank’s assets and trying to recover the highest value from outside bidders.

The company will then use the proceeds of these sales to appease its creditors, although it is very common for debtors to see a significant amount of their debts discharged in Chapter 7 bankruptcy.

The bankruptcy filing represents a humbling end for Ledgemont, which was founded by Keith Barksdale and Edward Neugeboren, who had left Lehman Brothers before its surprising collapse.

The company’s website describes the bank as a "boutique merchant bank combining traditional investment banking with principal investing, targeting growth companies."

It tried to survive the recent financial storm by focusing on a broad range of industries, including "energy, healthcare, industrials, technology, media, telecommunications and special situations," but these efforts at diversification ultimately failed.

The company can be proud, however, that it "completed over $25 billion in investment banking transactions," if its marketing materials are to be believed.

The bank is also noteworthy because of its employment of Kerry Kittles, a former basketball star at Villanova University who enjoyed a long NBA career with the New Jersey Nets and Los Angeles Clippers.

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