Scorned Funds Sue Hunkemöller, Redwood Over ‘Secret’ Deal (1)

A trio of hedge funds sued European lingerie retailer Hunkemöller International BV and its lender Redwood Capital Management over a June restructuring transaction they said violated their rights as creditors in order to benefit Redwood and the company.

Funds affiliated with Cheyne Capital Management, Man Group Plc and Contrarian Capital Management alleged in a lawsuit filed Tuesday that the deal whereby New York-based Redwood loaned an additional €50 million ($52.4 million) to Hunkemöller and received more favorable terms on the rest of its debt was not permitted under the terms of an existing credit agreement.

Through a so-called up-tiering ...