Elliott Wins Court Order to Force Stronghold Fund Liquidation

Paul Singer's Elliott Investment Management Inc. has secured a major legal victory in its dispute with Stronghold Investment Management, a Texas-based private equity firm. A Delaware Chancery Court judge ruled that Stronghold breached an earlier settlement agreement by failing to meet deadlines for selling assets in an oil and gas fund managed by the firm. The ruling allows Elliott to proceed with liquidating the partnerships, which it had been seeking for months.

Judge Bonnie David emphasized that Stronghold's delay in selling assets violated the terms of the 2022 settlement agreement between the two firms. The court has now ordered both parties to submit a wind-down plan for the two partnerships involved in the case. The decision was a direct response to Elliott's lawsuit filed in September 2025.

Elliott's legal action accused Stronghold of charging excessive expenses and refusing to liquidate the partnerships, which are known as Fund II. The firm argued that Stronghold's inaction was breaching the contract. Stronghold, meanwhile, has denied wrongdoing, claiming it delivered strong returns and that Elliott's push for liquidation would force the sale of assets at a discount, harming other investors.

Why the Standoff Happened

Elliott first invested with Stronghold in 2017 to support oil and gas ventures. However, the relationship began to deteriorate in 2022, leading to a legal settlement that required Stronghold to sell Elliott-related assets by the end of 2023, with a possible extension through 2024. The firm did not meet the timeline, prompting Elliott to file suit.

The dispute has been a focal point in recent litigation involving private equity and asset management. Stronghold has warned that the liquidation would hurt more than 100 other investors, as the firm would have to sell assets at a discount to accommodate Elliott's demands. This has led to accusations from Stronghold that Elliott is prioritizing its short-term liquidity over the broader investor base.

Elliott, on the other hand, has maintained that the settlement agreement was clear and that Stronghold's delay was a violation of its terms. The firm has long built a reputation as an aggressive activist investor, often pushing for structural changes in companies to unlock value. In this case, it argues that time is of the essence and that further delays only serve to devalue the assets.

What This Means for Investors

The court's ruling may force a significant shift in how Stronghold manages the partnerships. If the firm fails to comply with the wind-down order, it could face legal consequences or have to accelerate asset sales. This could result in further losses for investors who were not aligned with Elliott's strategy.

For Elliott, the win represents a strategic success in a long-running legal battle. The firm has previously used the Delaware courts to enforce its interests in other investments, including its well-publicized activist campaigns in major corporations. This ruling may embolden Elliott to pursue similar legal actions in the future, reinforcing its position as a formidable player in the private equity space.

Stronghold has not ruled out an appeal, with its legal team indicating that the firm would consider challenging the decision immediately. The outcome of any such appeal could set a precedent for future disputes involving private equity fund liquidations and contractual obligations.

Risks to the Outlook

The broader market may also take note of the ruling, especially in the private equity sector. The decision highlights the risks of relying on third-party managers to adhere to agreed-upon timelines and terms. It also underscores the importance of clear contractual language when structuring such agreements.

Analysts have pointed out that the case could influence how similar disputes are handled in the future. If Elliott's approach becomes more common, it could signal a shift in investor expectations when it comes to liquidity and asset management. This may pressure private equity firms to be more transparent and timely in their operations.

As both parties prepare to submit their wind-down proposals, the court is expected to play a key role in overseeing the transition. The final outcome will likely depend on how well each side can demonstrate its compliance with the settlement agreement while balancing the interests of all investors.