By Maiya Keidan
LONDON (Reuters) - City Financial has filed a notice of intention to appoint an administrator, court documents show, as a protective measure while the London-based hedge fund firm reviews its options.
The firm's CEO Robert Hain is quoted as saying in the documents, which were filed on Feb 22. and seen by Reuters, that it "is or is likely to become unable to pay its debts".
However, on Wednesday Hain said in an email: "City Financial is not in administration ... We are working with an advisory firm to review the options available to the business".
In December, Reuters revealed that City Financial and the chief investment officer of its Decca Fund had decided to close down its credit strategy. City Financial's assets under management had dropped following losses on a bet on volatile markets reported by Bloomberg.
City Financial had filed a "notice of intention to appoint administrators" as a protective measure while the board considers its next steps, Hain said.
These included "a number of positive discussions" about the future of City Financial, whose funds continue to operate as usual, with the priority to ensure a positive outcome for clients, Hain said, without giving any further details.
City Financial completed a restructuring of its business in December, including closing its New York office and said it was in sales talks for its long-short equities strategy, PivotBase.
Its assets dropped to $1.2 billion (£903.8 million) in December, from $3.3 billion 12 months earlier.
At the time, a source familiar with the matter told Reuters Hain would retire, following a period of regulatory transition.
A notice of intention to appoint an administrator prevents a third party from commencing or continuing legal action, Nick Moser, a partner at law firm Taylor Wessing, said.
Shortly after filing such a notice, a firm would either need to transfer management of its funds to another manager or close the fund and return cash to investors, another lawyer said.
Jason Daniel Baker of FRP Advisory, named along with Geoffrey Paul Rowley in the document as intended administrators, declined to comment when contacted by Reuters.
The solicitor named as a witness in the document, William Cudmore at Farrer & Co, declined to comment.
(Reporting by Maiya Keidan; Editing by Alexander Smith)
