Michael Platt’s BlueCrest Capital Management is said to be suing Meredith Whitney’s hedge fund for redemption of its investment, according to Max Abelson at Bloomberg News.

Her New York-based firm, Kenbelle Capital, manages the American Revival Fund, which has suffered around 11% losses in the year to November. BlueCrest had a USD 46 million investment in the fund, along with some other investors, making up around $50 million total, BlueCrest’s redemption notice was apparently accepted, and the shares were due to be redeemed this October. However, the proceeds have not been received by BlueCrest.

BlueCrest would have been a very significant investor, and it seems possible that withdrawal of the investment would mean a virtually complete liquidation of the portfolio, or at least a reassessment of the viability of the overall business. In the context of senior staff leaving Kenbelle recently, it it likely that hard decisions will need to be made.

Typically, valuations in hedge funds are made on the basis of a going concern, and in the event of a closedown, unamortized costs and liquidation values may cause the fund’s NAV on liquidation to be different from the reported NAV.

The suit is said to have been been filed in Bermuda, where case filings are not automatically made public. Crain’s reported that there had been an explicit agreement to conduct such exercises in New York.

Most hedge funds prefer disputes to be resolved behind closed doors even if there is ultimate recourse to a public court, so it is unusual for confidential filings to be made available to the press.