Pimco Debt Move in Texas Recycler Brings Credit Fights to Munis

A small investor is pushing back against bigger asset managers bringing the sharp-elbowed tactics of the corporate bond world to the normally placid confines of municipal finance.

Stephen McMullin, who manages less than $10 million for Fulcrum Point Capital, took to court this week to object to some of the maneuvering that has gone on around the bankruptcy of Aleon Metals LLC, a Texas recycling company that borrowed money in the municipal bond market.

Since Aleon and its subsidiaries declared bankruptcy last month, McMullin says that the largest bondholders negotiated behind the scenes to get better terms than small ...