In 2005, when David Barse, CEO of New York’s Third Avenue Management, decided to take a $250 million position in the distressed bonds of auto-parts maker Collins & Aikman, he anticipated the debt would be turned into equity once the company reorganized, with his investment firm as the largest shareholder. Instead, Third Avenue lost more than $100 million when Southfield, Michiganbased Collins & Aikman lost contracts -- most notably, a deal with Ford that had accounted for 25 percent of its business. The parts maker is now being sold off piece by piece.
Barse, 44, is not taking the hit lying down. The former bankruptcy lawyer has launched an attack on Collins & Aikman’s advisers, including restructuring firm Kroll Zolfo Cooper, and the multitude of bankruptcy lawyers hired in the case. Third Avenue filed a motion last month asking the Detroit judge overseeing the case to appoint an examiner to review how $100 million in fees, including the $32 million paid to Kroll, was spent. Barse’s hope is to claw back some of his losses. “This case is the prototype of abuse,” he says. Kroll declined comment.
