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Revealed: Soros Group behind mystery unit that gobbled Violin Memory

Going for a song: Hedge fund pulled the strings to snap up busted biz for $14.5m

A Soros hedge fund vehicle made the winning bid at Violin Memory's January 23 auction.

The winner, as we reported on Monday, was VM Bidco. Today, we can say that this organization was set up by the Soros Group, part of Soros Fund Management, and it fought off VMA LLC, ESW Capital and others. It won the three-day-long auction with an offer of $14.5m. Some details have still to be worked out.

When Violin Memory collapsed and filed for Chapter 11 bankruptcy protection, its market capitalisation was just $1.5m, having been $8.5m in October 2016.

The Soros Group must know there's some way of recovering more than $14.5m from the ashes of Violin Memory. It is an unsecured creditor of Violin and its bid includes swapping debt for equity, and funding the reorganizing of Violin Memory through debtor-in-possession financing.

VMA LLC has backup bid status and proposes to buy the company’s assets through what is known as a Section 363 asset sale in Chapter 11 bankruptcy proceedings.

Soros Fund Management is now a family-controlled investment group, having been one of the most profitable hedge funds in history. In effect, and if the bid is approved, Violin Memory moves into private equity ownership and will likely face restructuring and eventual sale. ®

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