Many private investment funds are nearing or have reached the end of their intended investment lifespan. Ambridge's LiquidationGap® Contingency Insurance can facilitate the accelerated wind-up or liquidation of a private investment fund by providing insurance for either identified or unidentified contingent obligations that the fund managers believe must prudently be provided for by way of reserves or hold backs.

Once a private investment fund has concluded its investment program and sold its investment portfolio, generally all parties have an interest in maximizing the amount of the final distribution and making such distribution as quickly as possible. However, general partners face a decision whether or not they need to maintain cash on hand to cover contingent liabilities - no matter how remote - and what the amount of holdback should be. There is an incentive to distribute as much as possible and thereby maximize investment returns for its members, however this exposes the fund and the general partner to potential liabilities, which if they crystallized would be difficult to recover from the fund members.

In addition, the ongoing operation of the fund to provide for identified or unidentified contingencies will involve the added need to holdback continued administrative and reporting costs that will further reduce amounts available for final distribution to investors. Such reserves or holdbacks are an inefficient use of capital, precluding the private investment fund investors and managers from generating the type of returns that they expect.