A. General Description of Advisory Firm
Solus Alternative Asset Management LP (“Solus”) is a limited partnership organized
under the laws of the State of Delaware. The firm was founded on June 29, 2007, when the
Hedge Fund Strategies Group of Stanfield Capital Partners (“Stanfield”) spun off to form an
independent firm under the continued leadership of Mr. Christopher Pucillo, former Head of
Hedge Fund Strategies at Stanfield. As a result, Solus acquired, and continued to act as the
investment manager to, all of Stanfield’s former hedge fund products. The investment team
remained intact throughout this transition. Mr. Pucillo is a principal owner of Solus, controls
Solus, and is a limited partner of Solus and the managing member of Solus’ general partner,
Solus GP LLC. Mr. Scott Martin is also a principal owner and limited partner of Solus.
B. Description of Advisory Services
1. Advisory Services
Solus serves as the investment advisor and sub-advisor with discretionary trading
authority to private pooled investment vehicles, the securities of which are offered to investors
on a private placement basis (each, a “Fund” and collectively, the “Funds”). In addition, Solus
serves from time to time as the investment advisor with discretionary trading authority to
separately managed accounts (“Managed Accounts”). As used herein, the term “Client”
generally refers to each Fund and each owner of a Managed Account.
As of the date of this Brochure, Solus provides its advisory services to the following
multiple investor Funds.
SOLUS HEDGE FUNDS
Sola Funds – The Sola Funds are a master-feeder structure that employs a credit, event
driven distressed strategy. Such strategy and the associated risks are described in more detail at
B.2 of this Item 4 and Item 8.
As of the date hereof, the Sola Funds are currently comprised of the following entities:
Offshore Feeder Funds: Sola I 2 (a feeder fund), Sola I (a feeder fund) and SMS
Ltd (an ERISA feeder fund) are Cayman Islands entities that generally invest
their assets in Sola Ltd (the “Sola Master Fund”) indirectly through an
investment in Sola Intermediate Fund Ltd (Sola Intermediate Fund Ltd and Sola
C Ltd, each, an intermediate fund). Sola II LLC is a Delaware limited liability
company single client feeder fund that generally invests its assets in a single
client fund, Sola C Ltd (and thus is categorized along with the non-U.S. Sola
funds in this Brochure). Such Funds are referred to herein as the “Offshore Sola
Hedge Funds”. Solus Advisors LLC, a Delaware limited liability company and a
Solus affiliate, serves as the managing member of Sola II LLC. Solus NL GP
LLC, a Delaware limited liability company and a Solus affiliate, serves as a
special shareholder of Sola Intermediate Fund Ltd. Sola I and SMS Ltd are no
longer generally available for subscription as those feeder funds are winding
down their assets.
Domestic Feeder Funds: Solus 2 LLC (a feeder fund) and Solus LLC (a feeder
fund) are Delaware entities that generally invest their assets in the Sola Master
Fund. Such Funds are referred to herein as the “Domestic Hedge Funds”. Solus
Advisors LLC, a Delaware limited liability company and a Solus affiliate, is the
managing member of the Domestic Hedge Funds. Solus NL GP LLC, a
Delaware limited liability company and a Solus affiliate, is a special member of
the Domestic Hedge Funds. Solus LLC is no longer generally available for
subscription as this feeder fund is winding down its assets.
In addition, in 2019, Solus offered Sola fund investors the option to segregate a single
asset within an “L-Band Portfolio” to retain their pro rata interest in the asset such that their
interests were not impacted by future subscriptions or withdrawals. In 2020, investors who
elected to restructure their Solus LLC, Sola I or SMS Ltd investments into Solus 2 LLC, Sola I 2
or Sola C Ltd elected to move their L-Band Portfolio to such funds. The interests in the L-Band
Portfolio in the Offshore Sola Hedge Funds and Domestic Hedge Funds are not available for
subscription and, as a result, the terms are not described in this Brochure.
Ultra Funds – The Ultra Funds are a single feeder master-feeder structure that employs a
credit, event driven distressed strategy. Such strategy and the associated risks are described in
more detail at B.2 of this Item 4 and Item 8.
The Ultra Funds are comprised of the following entities:
Offshore Funds: Ultra OC Ltd is a Cayman Islands feeder fund that invests its
assets in Ultra Master Ltd. Such Funds are referred to herein as the “Ultra Hedge
Funds”, and, together with the Offshore Sola Hedge Funds, the “Offshore Hedge
Funds”. Solus Ultra GP LLC, a Delaware limited liability company and a Solus
affiliate, serves as the special shareholder of Ultra Master Ltd.
The Offshore Hedge Funds and the Domestic Hedge Funds, collectively, are referred to
herein as the “Hedge Funds”.
LONG ONLY CREDIT FUNDS
Solus Senior High Income Funds – The Solus Senior High Income Funds are a master-
feeder structure that employs a long credit-based strategy that seeks to achieve a return that
meets or exceeds the S&P Performing Loan Index. Such strategy and the associated risks are
described in more detail at B.2 of this Item 4 and Item 8.
The Solus Senior High Income Funds are comprised of the following entities:
Domestic Funds: Solus Senior High Income Fund Domestic LP (a domestic
feeder fund) and Solus Senior High Income Dedicated Fund LP (a single
client feeder) are Delaware entities that invest all or a portion of their assets
in Solus Senior High Income Fund LP, a Delaware master fund (the “Solus
Senior High Income Master Fund”) (such funds, together, the “Domestic
Solus Senior High Income Funds”, or the “Solus Senior High Income
Solus Senior High Income GP LLC, a Delaware limited liability company and a Solus
affiliate, is the general partner of the Solus Senior High Income Funds.
LONG-TERM OPPORTUNITIES FUNDS
Solus Long-Term Opportunities Funds – The Solus Long-Term Opportunities Funds
are a master-feeder structure that employs a strategy focused on investing in longer duration and
less liquid stressed, distressed and event-driven investments. Such strategy and the associated
risks are described in more detail at B.2 of this Item 4 and Item 8.
The Solus Long-Term Opportunities Funds are comprised of the following entities:
Offshore LTO Fund: Solus Long-Term Opportunities Evergreen Fund Offshore
LP is a Cayman Islands entity that generally invests its assets in Solus Long-
Term Opportunities Fund Master LP (the “LTO Master Fund”) indirectly through
an investment in Solus Long-Term Opportunities Evergreen Fund Intermediate
LP (an intermediate fund). Such Funds are referred to herein as the “Offshore
Domestic LTO Funds: Solus Long-Term Opportunities Evergreen Fund LP and
Solus Long-Term Opportunities Fund LP are Delaware entities that generally
invest their assets in the LTO Master Fund. Such Funds are referred to herein as
the “Domestic LTO Funds”.
The Offshore LTO Fund and the Domestic LTO Funds, collectively, are referred to
herein as the “Long-Term Opportunities Funds”. Further, Solus Long-Term Opportunities
Evergreen Fund LP and Solus Long-Term Opportunities Evergreen Fund Offshore LP are herein
referred to as the “Evergreen Class” and Solus Long-Term Opportunities Fund LP is herein
referred to as the “LTO Class”.
Solus Long-Term Opportunities GP LLC, a Delaware limited liability company and a
Solus affiliate, is the general partner of the Long-Term Opportunities Funds.
Customized Services for Individual Clients; Customized Services – In addition to the
Funds described above, Solus provides advisory services to Managed Accounts, Funds and
classes established for certain large institutional investors. Solus also provides co-investment
opportunities through a Fund structure, as well as an insurance dedicated fund solution through a
sub-advisory relationship with SALI Fund Services. Such Clients may employ the same or
similar strategies as the Funds described above, a customized investment program with flexible
parameters to capitalize on strategic opportunities or some combination thereof. Solus may
permit such a Managed Account or Fund Client to have an investment mandate that provides for,
among other things, investment guidelines and concentration limits. Solus will seek to adhere to
any such mandate in accordance with the objectives, guidelines, limitations, terms, and any other
instructions in connection therewith.
This Brochure generally includes information about Solus and its relationships with its
Clients and affiliates. While much of this Brochure applies to all such Clients and affiliates,
certain information included herein applies to specific Clients or affiliates only. Thus, it is
crucial for any investor/prospective investor in a Solus Client to closely review the applicable
disclosure documents (e.g., a Fund’s Confidential Memorandum or similar disclosure document)
with respect to, among other things, the terms, conditions and risks of investing in the particular
Client or Clients in which such investor/prospective investor is making or considering an
2. Investment Strategies and Types of Investments
Solus currently provides advisory services in credit-based strategies, including the
Event driven, distressed strategy: Solus provides advice with respect to event-
driven, distressed and special situation investments both long and short across the
entire capital structure. Solus seeks to position and reposition portfolios
employing this strategy to attempt to reflect a compelling risk adjusted return.
Long only credit strategy: Solus provides advice with respect to portfolios
seeking incremental returns by investing in lesser focused-on situations that take
time to research
and source. Solus focuses on solid asset coverage, substantial
free cash flow, management, capital markets and/or adjusted risk return in
constructing its long only portfolios. Solus thinks that this strategy is not
constrained by a formulaic approach based on benchmarking, industry
diversification, ratings or deal size.
Long-Term Opportunities strategy: Solus provides advice with respect to
investments in longer duration and less liquid stressed, distressed and event-
driven investments, and may invest across a company’s capital structure and in all
stages of a company’s lifecycle, including the bankruptcy process. Solus thinks
this strategy offers several advantages to investors, including differentiated
returns and alignment of interests.
The following is a more detailed description of the strategies employed by Solus Clients.
Please note that these are summary descriptions of such strategies. The exact strategy employed
with respect to each Client is set forth in and governed by the terms and conditions of the
Confidential Memorandum and/or governing documents/investment management agreement of
the relevant Client. Thus, any investor or prospective investor in a Solus Client is reminded that
the disclosures in this Brochure are qualified by and subject to such Confidential
Memorandum/governing documents/investment management agreements.
Event Driven, Distressed Strategy
Solus’ investment objective for its Clients employing this strategy is to achieve an
attractive rate of return through income generation, capital appreciation and asymmetric
investment opportunities. Solus seeks to achieve the investment objective by combining its
fundamental research process, trading acumen, management expertise and integrated risk
management approach to react to changing market conditions by adjusting the portfolio
construction to seek to deliver the maximum risk-adjusted performance. Solus is focused on
capital structure value investing. Solus seeks to exploit value throughout the capital structure,
both long and short, from senior secured loans to restructured equities, capitalizing on Solus’ in-
depth knowledge of fundamental valuation and market technicals. Solus’ investment flexibility
accommodates the repositioning of the portfolio in an effort to reflect what Solus believes are the
most compelling risk-adjusted investment opportunities. Solus invests in all parts of a
company’s capital structure and in all stages of a company’s life cycle, including the bankruptcy
process. Solus’ investments include a broad spectrum of listed and over-the-counter financial
products including, but not limited to, bank loans, corporate securities, equities and equity-linked
products, derivatives and other financial instruments and investments. Solus may make these
investments directly or indirectly by entering into one or more swaps, options, forward contracts
or similar derivative transactions. A further description of these strategies and instruments can
be found in Item 8.
Long Only Credit Strategy
Solus’ investment objective for any Clients employing this strategy is to achieve a return
that meets or exceeds the S&P Performing Loan Index on an after fee (net) risk adjusted basis
through investments that are primarily focused in the non-investment grade bond and loan
markets. Solus seeks to achieve the investment objective by capitalizing on its in-depth
knowledge of fundamental valuation and market technicals. Solus’ flexibility is expected to
facilitate the timely repositioning of the portfolio in an effort to reflect what Solus believes are
the most compelling risk-adjusted investment opportunities. As previously noted, investments in
this strategy will typically include financial instruments such as bonds and loans, which
instruments are described in more detail in Item 8.
Long-Term Opportunities Strategy
Solus’ investment objective for Clients employing this strategy is to generate superior
returns by investing in longer duration and less liquid stressed, distressed and event-driven
investments. Solus seeks to achieve the investment objective by primarily utilizing the
following investment strategies:
Stressed/Distressed: This category is comprised of both pre- and post-
restructuring investments. Solus will seek to identify undervalued opportunities
that can arise from the general malaise that cyclical industries suffer, as well as a
result of company-specific stress. As companies come under increased stress,
original “par” purchasers of debt are often pressured to sell their holdings,
allowing for distressed investors to source the company’s debt at discounted
levels at the bottom of the cycle. There are high barriers to entry in this strategy,
given the experience and expertise required to analyze complex capital structures,
navigate the bankruptcy process, and create catalysts to unlock value.
Post-Reorganization Equities: This category is comprised of equity in
companies that have recently emerged from bankruptcy. Generally, the
characteristics of these companies include low enterprise valuations, strong asset
coverage and/or free cash flow generation, minimal debt, new management
teams/boards, and multiple paths to value creation. Upon emergence from
bankruptcy, many of these equities trade at discounts to their peers due to factors
such as a concentrated investor base, restructuring-related taint, and a lack of sell-
side research coverage. Solus will target companies that are attractive candidates
for M&A events, IPO transactions or dividend payments recapitalization
Performing Credit: In this yield-focused strategy, Solus will seek out superior
returns through investments in high-yield bonds and leveraged loans. Original
holders of a company’s debt often have difficulty providing incremental capital to
fund additional capital opportunities due to their investment mandate. The
number of market participants is limited, as many credit investors are not
equipped to perform the internal underwriting (e.g., lack of credit ratings, trading
liquidity, sell-side research, etc.) or legal analysis that is essential in evaluating
follow-on investment opportunities or other special situation opportunities.
Investments in this strategy will be focused on situations where Solus will
generally be able to exert influence over a variety of factors, such as structure,
terms, covenants and pricing. Opportunities also exist in small- to mid-cap credits
due to market participants’ desire for large deal sizes.
Liquidations: This category represents a very specific segment of the distressed
lifecycle that requires experience in researching liquidating estates and the
associated legal process. This strategy focuses on investments in a variety of late-
stage bankruptcy, liquidation and litigation claims with recoveries that are
generally backed by cash and hard assets, so returns generally exhibit low
correlation to debt and equity markets. Solus believes there is an opportunity to
create asymmetric upside due to potential claims pool reduction, increase in
distributable cash and assets, accelerated timing of cash distributions and potential
litigation recoveries. Solus will generally focus on investing in the later stages of
the process, following confirmation of the plan of liquidation when there is high
visibility into recovery mix and a discernible timeline for asset monetization and
A further description of financial instruments utilized by this strategy can be found in
Solus seeks to achieve the investment objective of its Clients by combining its
fundamental research process, trading acumen and integrated risk management.
The descriptions set forth in this Brochure of specific advisory services that Solus offers
to Clients, and investment strategies pursued and investments made by Solus on behalf of its
Clients, should not be understood to limit in any way Solus’ investment activities. Solus may
offer any advisory services, engage in any investment strategy and make any investment,
including any not described in this Brochure, that Solus considers appropriate, subject to each
Client’s investment objectives and guidelines. The investment strategies Solus pursues on behalf
of its Clients are speculative and entail substantial risks. Clients should be prepared to bear a
substantial loss of capital. There can be no assurance that the investment objectives of any
Client will be achieved.
C. Assets Under Management
As of December 31, 2022, Solus managed approximately $3.4 billion on a discretionary
basis, which amount reflects regulatory assets under management. As regulatory assets under
management is a regulatory-driven concept, Solus also notes that as of December 31, 2022,
Solus managed approximately $2.9 billion based on net asset value calculations and including
any committed but undrawn capital. Solus does not manage any assets on a non-discretionary
basis as of the date of this Brochure.
This Brochure does not constitute an offer to sell or solicitation of an offer to buy any
securities. The securities of the Funds are offered and sold on a private placement basis under
exemptions promulgated under the Securities Act of 1933 and other applicable state, federal or
non-U.S. laws. Significant suitability requirements apply to any prospective investors in the
Funds, including requirements that they be “accredited investors” as defined in Regulation D,
“qualified purchasers” as defined in the Investment Company Act, or non-”U.S. Persons” as
defined in Regulation S. Persons reviewing this Brochure should not construe this as an offer to
sell or a solicitation of an offer to buy the securities of the Funds described herein. Any such
offer or solicitation will be made only by means of a Confidential Memorandum or similar