When Private Equity Limited Partners Fail
Richard F. Hahn and Michael E. Wiles, partners at Debevoise & Plimpton, and Bryan R. Kaplan, an associate with the firm, write that until recently, it seemed improbable that an institutional investor in a private equity fund (limited partner) would be unable to satisfy a capital commitment due to liquidity problems, or would be compelled to file for bankruptcy protection. Under current market conditions, however, they warn that the threat of a limited partner’s insolvency is no longer a remote possibility.
