A Miami-based investor, Alphatur Inc., has filed a lawsuit in Manhattan federal court against Canaras Capital Management, Saranac CLO Management, and U.S. Bank Trust Company, alleging a $50 million loss in three collateralized loan obligation (CLO) funds: Saranac CLO III, V, and VII. Alphatur claims that the defendants concealed the severe deterioration and impairment of the underlying collateral, misleadingly portraying it as normal market volatility. The lawsuit includes claims of federal securities fraud under Section 10(b) and Rule 10b-5, along with New York state claims for breach of contract, breach of fiduciary duty, and gross negligence.
According to the complaint, Alphatur was promised that the collateral backing its notes would be diligently preserved, monitored, and only released in accordance with governing documents. However, the lawsuit alleges that the defendants "authorized, permitted, recorded, concealed, or failed to prevent" collateral releases and transfers that significantly impaired the collateral base and led to the total loss of Alphatur's $50 million investment. Canaras Capital Management, described as an SEC-registered investment adviser specializing in corporate CLOs, was identified as a key player in the 2013 pitch to Alphatur.
U.S. Bank Trust Company, acting as the trustee and collateral administrator, is being sued for failing in its duties to maintain accurate records, monitor collateral releases, and provide proper notice to investors. A significant point of contention is U.S. Bank's October 2025 response, prior to the lawsuit, confirming its role as successor trustee but stating it had no record of Alphatur holding any notes under the indentures. Canaras's counsel further complicated matters by claiming Alphatur never completed Jersey know-your-customer checks and that some activity reports were backdated to 2023. Alphatur is seeking over $50 million in damages, a full accounting, and declaratory and injunctive relief, and has demanded a jury trial.
