Centerbridge Holds First Close For Distressed Debt Fund

Firm: Centerbridge Partners

Fund: Centerbridge Special Credit Partners LP

Amount Raised: $467.1 million

Centerbridge Partners has secured new pledges of nearly half a billion dollars for a distressed debt fund, according to a recent regulatory filing. The New York-based firm, which is run by Jeffrey Aronson and Mark Gallogly, closed on $467.1 million worth of commitments for Centerbridge Special Credit Partners LP in June.

No target has been set for the debt fund, which follows Centerbridge Capital Partners LP, a $3.2 billion buyout fund which wrapped in 2006. The firm is using Park Hill, a unit of The Blackstone Group, as the placement agent for the effort and the fund has already attracted 37 investors. Previous limited partners for the firm’s buyout fund included California State Teachers’ Retirement System, the Pennsylvania State Employees’ Retirement System, the New Jersey Division of Investment and the University of Texas Management Company.

Centerbridge wasn’t immediately available for comment.

Centerbridge tapped the buyout fund for its recent club investment in BankUnited, a Coral Gables, Fla., bank, alongside The Carlyle Group and W.L. Ross & Co. That deal, a distressed situation that coincided with the federal government’s seizure of BankUnited, featured a $900 million equity injection from the buyout firms.

Known for keeping its cards close to the vest, Centerbridge has been making headlines of late. In addition to the coverage generated by the BankUnited deal, the firm has also been embroiled in a controversy involving the June 15 bankruptcy filing by hotel chain Extended Stay America. According to various media reports, the firm is being sued along with Cerberus Capital Management, both mezzanine lenders to Extended Stay, by certain junior lenders. At issue are plaintiff claims that the firms schemed along with David Lichtenstein, who controls Extended Stay through real estate company The Lightstone Group, to steer the company into bankruptcy and subsequently squeeze out the junior lenders. Neither Centerbridge or Cerberus were available for comment on the lawsuit.

Debt investing was very much on Aronson’s mind last summer when he reportedly told attendees of a June 2008 conference sponsored by the Wall Street Journal that Centerbridge had spent “billions of dollars” buying loans and high-yield bonds from banks in the preceding months. Prior to founding Centerbridge with Gallogly in 2006, Aronson was a partner at Angelo, Gordon & Co. Gallogly had been a senior managing director at Blackstone.

Centerbridge’s investments include Dana Holding Corp., a Toledo, Ohio-based automotive components maker; Greatwide Logistics Services, a Dallas-based provider of transportation and distibution services; Green Tree Servicing; a St. Paul, Minn.-based consumer financial services company.