(Bloomberg) -- “One of the largest corporate raids at an asset manager in years.” As a summing up of what befell private credit stalwart Barings over a single miserable March weekend, it’s hard to beat.

That the comment came from the firm’s own lawyers in a suit filed on Monday shows the rancor caused by the defection of about two dozen staff to a new private credit outfit, called Corinthia Global Management, that’s backed by Japan’s Nomura Holdings Inc.

The shock exodus — taking out a big chunk of Barings’ private credit arm — and subsequent legal brawl, lay bare the fierce fight for talent in this booming $1.7 trillion market. Poaching entire teams is common in the knockabout world of Wall Street and corporate law, but it’s the first time an audacious move at such scale has been seen in this once sedate corner of finance.

“This is the biggest team-lift I’ve seen in private credit,” said Richard Risch, who runs his own executive search business. “This opens up the door for other organizations who don’t have a presence in the space to look at poaching teams as opposed to buying a business.”

What happens next will have huge repercussions in terms of what firms can do if wealthy rivals or new entrants try to lure away their stars. The standoff also raises profound questions for Barings about why a senior team has opted to jump ship and risk the anger of investors in their old funds. 

Bad Weekend

Barings’ weekend from hell began on Friday, March 8. That evening, more than 20 employees in its lucrative private credit business suddenly quit en masse, according to its lawsuit.

Around the same time an email landed in the inbox of Roger Crandall, head of Barings’ parent firm MassMutual, with a request: Would he be free to chat the next day?

The sender, Paul Weightman, who in recent weeks launched Corinthia with support from Nomura, shot Crandall a follow-up on Saturday, the lawsuit says. He noted how the departures would “create a range of issues” for the Barings franchise and offered to help. Attached was a term sheet: Corinthia would assume responsibility of Barings’ entire global private finance business, hire the team’s remaining employees, and buy its portfolio at what amounted to “pennies on the dollar,” according to the firm’s legal filing.

Oh, and Barings needed to sign by the following Monday.

Dismayed, Barings has filed suit against Corinthia and two former executives. The brain drain includes 11 professionals in the UK and Europe and six in the US from its global private finance team, including the heads of the business and other key leaders. Five other distribution and capital markets professionals also departed, according to a letter Barings sent investors later on Monday.

Parting Shots

In its legal filing Barings argues that two ex-staffers — Ian Fowler and Kelsey Tucker — are violating their contracts by misappropriating and misusing the firm’s confidential information to recruit employees and start up Corinthia.

Specifically, Barings said Fowler signed an agreement in June 2022 that contained restrictions against hiring Barings employees or soliciting its clients. The suit says Fowler has spoken to at least one Barings client about Corinthia.

In the days following the resignations, Tucker, the former global head of operations of Barings, reached out to current employees, and stated on March 10 that “we are going after everyone,” the lawsuit continues. Also on March 10, Weightman allegedly tried to recruit one of Barings’ in-house lawyers who was actively working on the firm’s response to Corinthia’s hires.

Barings then sent letters to the employees who left to ask for the return of confidential information but never heard back. On March 12, Corinthia responded through its counsel to dismiss Barings’ concerns.

A representative for Barings declined to comment beyond previous statements. A representative for Corinthia declined to comment. Fowler referred comment to Corinthia, adding he isn’t currently an employee of the firm. Tucker didn’t respond to a request for comment.

Barings has since appointed new management for its investment committees in North America and also in Europe and the Asia-Pacific region, according to a filing. “In addition to our deep bench of experienced leaders, we remain well supported by a platform of more than 80 private credit team members,” it wrote in the investor letter.

According to the Barings letter, the UK investment professionals are on gardening leave until either May 30 or June 8. The US employees’ last day will be March 22. Barings also wrote in its letter that it’s pausing new investments across certain private credit funds while they transition to the new leadership.

The case is Barings LLC v. Ian Fowler, 24CV012798-590, Mecklenburg Superior Court in North Carolina.

--With assistance from Michael Tsang and Claire Boston.

(Updates throughout with more context.)

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