Tilton will temporarily remain in charge of three credit funds, sequentially named "Zohar," until investors in those funds select a collateral manager. Tilton is not relinquishing her position as CEO of Patriarch Partners, the private equity firm she controls and in which all of the Zohar funds are heavily invested.
It also means that Tilton is withdrawing the bankruptcy filing for Zohar I, the first credit fund that she raised to support her private equity operations. Together, the funds assets total about $2.5 billion.
"The constant litigation between Patriarch and MBIA that began in 2009 and continues today has created a nonproductive and untenable relationship between parties who by definition should be aligned," Tilton said in a statement. "The battles have led me to make the decision that I could no longer leave this choice open, but instead my firm and I must step down so we can focus fully on driving the value of the portfolio companies."
While Tilton is no longer in control of the Zohar funds, and cannot earn fees from them any longer, she is still fighting separate litigation from investors in the funds, includingNorddeutsche Landesbank Girozentrale and Hannover Funding, both of which allege that she made numerous misrepresentations in accounting paperwork regarding how financial statements were prepared and about the performance of assets tied to her credit funds.
A representative for Tilton declined to provide further comment.