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Clawback payment to the lps be in order

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Suppose a fund invests $1 million in each of three portfolio firms. The ?rst investment is held for the entire fund life and finally proves to be a total bust, returning nothing. The second investment is harvested quickly for $5 million and there is a distribution at that point with the usual carry terms (GPzLP, 20:80). The third investment is the ?nal one and turns out to also be a bust. If a clawback provision had been included in the agreement, would a clawback payment to the LPs be in order? (Ignore fees). Explain why or why not. If so, how much would be clawed back?

Reference no: EM133062699

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