Structure; History and Ownership
Avenue Capital Management II, L.P. (CRD #111845) (“Avenue U.S.”), Avenue Europe International Management, L.P. (CRD #131937) (“Avenue Europe”), Avenue Asia Capital Management, L.P. (CRD #113246) (“Avenue Asia”) and Avenue Credit Management, L.P. (CRD # 286584) (“Avenue Credit”) (each, a “filing adviser” and collectively, the “firm,” “Avenue Capital Group,” “Avenue,” “Avenue Capital” or “we”) is a group of commonly owned investment advisers with their principal place of business in New York City. Avenue Capital Group generally provides investment advisory services to private investment funds (“private funds”) and may provide investment advisory services to separately managed accounts. In addition, Avenue U.S. provides sub-investment advisory services to a third-party investment manager in respect of a registered investment company (the “Sub-Advised Public Fund,” and together with private funds and any separately managed accounts, “funds”). In addition to our offices in New York, we have offices in London, Luxembourg, Madrid, Milan, Sydney, Hong Kong, Beijing, Delhi and Singapore. This brochure provides information about: (i) Avenue Capital Group and (ii) general partners or managing members of funds that are relying on the filing advisers’ registration as investment advisers (in accordance with the U.S. Securities and Exchange Commission (“SEC”) letter to the American Bar Association, Subcommittee on Private Investment Entities dated December 8, 2005 (the “2005 SEC Letter”)), which are listed in Section 7.A. of Schedule D in Part 1A of each filing adviser’s Form ADV. This brochure also provides information about Avenue Europe’s and Avenue Asia’s respective relying advisers which are listed in Schedule R of Part 1A of Avenue Europe’s and Avenue Asia’s Form ADV pursuant to General Instruction No. 5 to Form ADV Part 1A.1 Each such entity conducts its activities in accordance with the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and the rules thereunder, and is subject to the supervision and control of Avenue Capital Group, including being subject to Avenue Capital Group’s investment adviser compliance policies and procedures. Avenue U.S. commenced business in 2000 and has been registered as an investment adviser with the SEC since July 17, 2000. Avenue Europe commenced business in 2004 and has been registered as an investment adviser with the SEC since July 2, 2004. Avenue Europe Management, LLP, a relying adviser of Avenue Europe, has been authorized by the U.K. Financial Conduct Authority since 2004. Avenue Asia commenced business in 2001, has been registered as an investment adviser with the SEC since July 13, 2001 and has been registered as a Foreign Institutional Investor with the Securities and Exchange Board of India since 2008. GL Advisors Hong Kong Limited, a relying adviser of Avenue Asia, received a Type 9 (asset management) license with the Securities and Futures Commission of Hong Kong in August 2015. Avenue Credit has been registered as an investment adviser with the SEC since February 10, 2017. Avenue Capital Group, including the general partners and managing members of funds and Avenue Europe’s and Avenue Asia’s relying advisers is a global alternative investment firm founded in 1995. As of February 28, 2019, Avenue Capital Group had approximately 170 employees worldwide, including approximately 56 investment professionals. Avenue Capital Group maintains a well-developed infrastructure with extensive accounting, operations, legal, business development, risk management, compliance and information technology teams. 1 Neither Avenue U.S. nor Avenue Credit has any relying advisers pursuant to General Instruction No. 5 to Form ADV Part 1. Marc Lasry (Chairman, Chief Executive Officer and Co-Founder) and Sonia Gardner (President, Managing Partner and Co-Founder) are the Senior Principals of Avenue Capital Group and together control the general partners of each filing adviser (i.e., Avenue Capital Management II GenPar, LLC, Avenue Asia Capital Management GenPar LLC, Avenue Europe International Management GenPar, LLC and Avenue Credit Management GenPar, LLC). Richard Furst is the Chief Investment Officer of Avenue Capital and spends a portion of his time providing high-level investment oversight globally, including to Avenue Capital Group. Shawn Foley is a Senior Portfolio Manager and is responsible for Avenue U.S.’s Aviation sub-strategy. Matt Kimble is a Senior Portfolio Manager and is responsible for Avenue U.S.’s Energy sub-strategy. Jane Castle is a Senior Portfolio Manager and is responsible for certain portions of Avenue U.S.’s general Distressed strategy and is responsible for Avenue U.S.’s Public Fund strategy. Shawn Foley, Matt Kimble and Jane Castle are collectively responsible for Avenue U.S.’s Distressed strategy focusing on investments in portfolio companies headquartered or with principal places of business in the United States and Canada. Edward Gellert is a consultant to Avenue Capital Group and is responsible for Avenue U.S.’s Real Estate strategy.2 William Maier is a Senior Portfolio Manager and is responsible for Avenue U.S.’s Performing Loans strategy. Richard Furst is a Senior Portfolio Manager and the Co-Head of Avenue Europe. Jonathan Ford is also a Senior Portfolio Manager and the Co-Head of Avenue Europe. Anil Gorthy is a Senior Portfolio Manager and is responsible for Avenue Asia’s Distressed strategy. John Larkin is the Senior Managing Director of Avenue U.S.’s Sustainable Solutions strategy. Peter Pulkkinen is a Portfolio Manager responsible for assisting with the direction of the investment activities of Avenue U.S.’s Sustainable Solutions strategy. Our primary investment advisory service is to provide discretionary investment advice to funds. In addition to funds, we may in the future also advise one or more separately managed accounts on a discretionary basis. The objective and strategy of a managed account may but is not required to be similar to the investment objective and strategy of a fund managed by Avenue Capital Group. Avenue Capital Group’s primary focus is investing in credit obligations (public and private), including without limitation, distressed debt and equity opportunities, other special situations (which includes private equity opportunities) and high yield investments in the United States, Europe and Asia. The Senior Principals and the Portfolio Managers of funds managed by Avenue Capital Group have spent virtually their entire careers in this space. Avenue Capital Group generally pursues a theme-driven, concentrated investment strategy that is analytically intensive and relies upon individual issuer, industry and macro research and analysis. To execute this strategy, Avenue Capital Group has assembled an experienced team of investment professionals. The depth of experience of these professionals allows for thorough research and analysis of potential investment opportunities, including issuers with complicated, multi-layered capital structures in complex and dynamic industries. Avenue U.S. Avenue U.S. advises funds using investment strategies that may include one or more of the following strategies and sub-strategies:  Private Funds  Distressed; o Energy 2 Mr. Gellert was a Senior Portfolio Manager responsible for Avenue U.S.’s Real Estate strategy until March 16, 2018. o Aviation  Real Estate;  High Yield;  Performing Loans;  Private Transactions (including private credit and equity transactions); and  Sustainable Solutions.  Sub-Advised Public Fund  Distressed; and  High Yield. In addition to Avenue U.S.’s Distressed funds and its Energy and Aviation funds, a portion of the assets Avenue U.S. manages may be invested by its Real Estate funds, High Yield funds, Performing Loans funds, Private Transactions funds and/or Sustainable Solutions funds. Avenue U.S. provides sub- investment advisory services to a third-party investment manager in respect of the Sub-Advised Public Fund which employs a variation of Avenue U.S.’s Distressed and High Yield strategies. Avenue U.S.’s Distressed, Real Estate, High Yield, Performing Loans and Sustainable Solutions strategies include private funds. Avenue U.S.’s Private Transactions strategy may include private funds and other pooled investment vehicles with private transactions as part or all of their investment mandate. Thus, Avenue U.S. provides investment advice to private funds and to a third-party investment manager in respect of the Sub-Advised Public Fund. Avenue Europe Avenue Europe advises funds using investment strategies that may include one or more of the following strategies and sub-strategies:

 Distressed;  Direct Lending;  High Yield; and  Private Transactions (including private credit and equity transactions). Avenue Europe’s primary investment strategy is a Distressed strategy pursuant to which Avenue Europe invests in distressed debt and other special situations, which includes private equity opportunities, investments in Europe. Avenue Europe considers European companies to be companies that are headquartered or have a principal place of business in Europe, whose country of risk is in Europe (i.e., the primary source of revenue risk as determined by Avenue Europe), or that have issued securities or other financial instruments denominated in a European currency. In addition to Avenue Europe’s Distressed funds, a portion of the assets may be invested by Avenue Europe’s Private Transactions funds. Avenue Europe’s Private Transactions funds include private funds and other pooled investment vehicles with private transactions as part or all of their investment mandate. Avenue Asia Avenue Asia’s Distressed strategy generally focuses on:  companies undergoing a restructuring, reorganization or bankruptcy;  companies that are operationally sound, but financially troubled due to overleveraged balance sheets, inadequate capitalization or limited access to capital;  companies that are undervalued because of discrete extraordinary events or economic conditions; and  companies being sold for less than their intrinsic value. Avenue Asia focuses on special situations investment opportunities in the Asian region, which includes Australia and New Zealand. Avenue Asia’s investment professionals seek undervalued securities or assets being sold at a discount by non-economic sellers, including single assets or concentrated pools of assets. Avenue Asia leverages its network of local investment, legal, and accounting professionals to source and execute investment opportunities and engage in active portfolio management. In addition to seeking special situations Avenue Asia’s Distressed strategy focuses on investments in debt and equity across industries, sectors and geography. Avenue Credit The funds to be advised by Avenue Credit are expected to employ a Distressed and High Yield strategy. *** Prospective investors in any fund are advised to review the private fund’s confidential offering memorandum or, in the case of the Sub-Advised Public Fund, the prospectus that is included in the registration statement that has been filed with the SEC, for a more in-depth description of that fund’s investment strategy and objectives, types of assets to be invested in, investment restrictions (if any), and related risk factors. Some of the private funds we advise are feeder funds to or parallel funds of other funds. In some cases, such as certain of the Distressed funds, we advise successor funds to earlier funds that have concluded their investment period. A list of the funds we manage can be found below at Item 10.
Types of Advisory Services
As described above, Avenue Capital Group generally provides advisory services to private investment funds, and we may provide advisory services to separately managed accounts for institutional investors. Avenue U.S. also provides sub-advisory services to a third-party investment manager in respect of the Sub-Advised Public Fund. Neither Avenue Capital Group nor any of our affiliates is acting as an investment adviser or otherwise making any recommendation as to an investor’s decision to invest in the funds. The advisory services we provide to investment funds are provided on a discretionary basis. The advisory services we provide to managed accounts may be discretionary or non-discretionary. Avenue Capital Group may manage one or more private funds (i.e., pooled investment vehicles) in which Benefit Plan Investors3 would have aggregate holdings of 25% or more of the value of one or more classes of such funds’ outstanding equity interests, resulting in the assets of the respective funds being treated as “plan assets” under ERISA. The applicable adviser would be considered a fiduciary of “ERISA plans” investing in the private fund. The applicable adviser would manage the operations and transactions of a private fund that is deemed to hold “plan assets” in a manner that complies with the applicable provisions of the prohibited transaction rules of ERISA and Section 4975 of the Code. The applicable adviser intends to rely on the applicable provisions of the relief available under various exemptions issued by the U.S. Department of Labor, including the relief available under prohibited transaction exemption 84-14, as amended, for transactions negotiated by a “qualified professional asset manager,” when such operations or transactions would otherwise constitute prohibited transactions. Pursuant to an exemption under U.S. Commodity Futures Trading Commission (“CFTC”) Rule 4.13(a)(3), none of Avenue Capital Group’s investment advisers, general partners or other affiliates are required to register, and are not registered, with the CFTC as commodity pool operators. None of Avenue Capital Group’s investment advisers, general partners or other affiliates are required to register with the CFTC as a commodity trading advisors. The investment strategies we employ are described below at Item 8. The description of each investment strategy, including restrictions on permissible investments, investment guidelines and applicable risk factors, is not intended to apply to any particular fund (unless explicitly stated otherwise), which could employ one or more of Avenue Capital Group’s investment strategies.
Assets Under Management
As of June 30, 2019, Avenue Capital Group collectively managed approximately $10,524,133,000 of client assets, all on a discretionary basis.4

3 As defined under Section 3(42) of the U.S. Employee Retirement Income Security Act of 1974 (“ERISA”), “Benefit Plan Investors” include: (i) employee benefit plans (such as defined benefit plans or profit-sharing plans) within the meaning of Section 3(3) of ERISA and subject to Title I of ERISA (“ERISA plan”); (ii) individual retirement accounts and other retirement plans and accounts subject to Section 4975 of the Internal Revenue Code of 1986 (the “Code”); and (iii) any other entity whose underlying assets include “plan assets” by reason of any Benefit Plan Investor’s investment in such entity. Fiduciaries of ERISA Plans or other plans or individual retirement accounts subject to Section 4975 of the Code are subject to fiduciary responsibility and prohibited transaction issues which may arise with respect to a private fund’s operations and transactions if at any time the underlying assets of such fund constitute “plan assets” of such plans or individual retirement accounts under U.S. Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA. These regulations provide that when such a plan or individual retirement account invests in an equity interest in an entity (such as a private fund), its assets will include both the equity interest and the undivided interest in each of the underlying assets of the entity, unless an exception set forth in the regulations is applicable. The regulations provide an exception for an entity if, immediately after the most recent acquisition or disposition of any equity interest in the entity, Benefit Plan Investors hold less than 25% of the value of each class of equity interest in the entity. 4 Except as otherwise provided below, as of June 30, 2019: (a) Avenue U.S. managed approximately $5,755,440,000 of client assets; (b) Avenue Europe managed approximately $4,215,548,000 of client assets; (c) Avenue Asia managed approximately $553,145,000 of client assets, in each case on a discretionary basis; and (d) Avenue Credit managed $0 of client assets. These amounts represent the regulatory assets under management of each respective adviser. please register to get more info

Fees
Detailed information regarding fees is included in each fund’s confidential offering memorandum or prospectus, as applicable. Because this brochure will only be delivered to “qualified purchasers” investing in our private funds, as defined in Section 2(a)(51) of the Investment Company Act of 1940, a complete description of our compensation arrangements is not required to be included in this brochure. Fees paid for services provided to managed accounts are determined on a client-by-client basis and may, but are not required to, be substantially similar to those paid by funds. The Sub-Advised Public Fund generally pays management fees monthly in arrears based on average daily net assets to a third-party investment manager. In turn, the third-party investment manager pays Avenue U.S. a portion of such monthly management fee in exchange for Avenue U.S.’s sub-advisory services to the third-party investment manager. The third-party investment manager’s management fees for the Sub- Advised Public Fund are calculated based on a percentage of average daily net assets. The private funds we advise generally pay management fees and incentive allocations or carried interest, depending upon each fund’s investment strategy. Management fees for private funds, calculated as a percentage of the asset value or aggregate commitments of the fund attributable to each investor, are generally paid monthly, quarterly or semi-annually in advance. With respect to our private funds that pay us a carried interest, management fees are pro rated for partial periods in the event that our investment management agreement with the fund is terminated or an investor makes a capital contribution or purchases shares at any time other than at the beginning of a fund’s valuation period, but are payable in full for partial periods resulting from distribution of fund assets. With respect to the Sub-Advised Public Fund to which Avenue U.S. provides sub-advisory services to a third-party investment manager, management fees are pro rated for partial periods. Incentive allocations or carried interest are calculated as a percentage of profits of the private funds. Some private funds pay incentive allocations, in whole or in part, on mark-to-market performance at the end of a period (year-end or upon a partial or full withdrawal), subject to a high watermark. Other private funds pay a carried interest on realized returns. For those funds, such carried interest payments are not paid to us until investors receive 100% of their capital back plus a preferred return. Management fees, incentive allocations and carried interest rates may be negotiable. Avenue Capital Group may receive income in the form of underwriting fees, break-up fees, commitment fees and other such fees. However, Avenue Capital Group will not accept any fees that would trigger broker-dealer or other registration unless and until the appropriate parties obtain the proper licenses and registrations. For more information regarding certain categories of fee income, including without limitation, break-up fees, please see Item 5 under the heading “Fees and Compensation – Expenses – Funds.”
Expenses
Whether an expense is a fund or firm expense is governed by each fund’s operative documents and is the joint responsibility of the Chief Compliance Officer and Chief Financial Officer, with the assistance of such other parties as they deem necessary, to oversee how expenses are allocated. Expense allocation determinations may be made as to broad categories or expense types or on an expense item-by-expense item basis. If permitted under a fund's controlling documents, from time to time the management company may advance payment of an expense on behalf of the fund and to the extent that the expense may be appropriately borne by the funds, the management company may seek reimbursement from the funds. Once a determination is made that an expense is a fund expense that is attributable to more than one fund, the Chief Compliance Officer and Chief Financial Officer, with the assistance of such other parties as they deem necessary, shall determine the appropriate allocation methodology among the funds. For instance, research that generally could benefit any fund within a strategy or among strategies may be allocated among such funds/strategies based on the funds’ strategies’ respective net asset values or in such other manner as Avenue Capital Group deems equitable among the funds. Other expenses that directly relate to a specific investment may be allocated based on how the investment is held by, or is to be allocated to, the funds. There may be situations where an expense may be allocable to some but not all of the funds that receive the benefit of such expense. In these situations, the funds that can bear the expense shall bear their allocable share of the expense and Avenue Capital Group shall pay the remainder.
Funds
The payment of expenses by a fund will reduce the value of each investor’s investment in the fund. Detailed information regarding the expenses to which each fund is subject is set out in the offering documents or prospectus, as applicable, with respect to the particular fund. Private Funds Generally, each feeder fund bears its own expenses and its pro rata share of the expenses of any master fund or intermediate fund. Private fund expenses may include, without limitation, the following categories of expenses:  formation expenses of the fund and related entities, including fees and expenses of counsel to, accountants for and agents of the fund, its general partner, if applicable, and the applicable filing adviser, of personnel of the applicable filing adviser and its advisors, and other expenses (including, without limitation, travel and travel-related costs and expenses (including business class airfare and first class airfare)), in each case, incurred in connection with the formation and marketing of the fund and related entities, the preparation of the fund’s operative documents and the offering of equity interests of the fund;  audit fees and other out-of-pocket expenses incurred in connection with the preparation and distribution of financial statements for the fund, any portfolio company or special purpose vehicles used by the fund with respect to any investment, audit and reporting compliance;  expenses incurred in connection with the evaluation, acquisition or disposition of investments (whether or not consummated), including: o private placement fees, o sales commissions, o appraisal fees, o taxes, o brokerage fees, o underwriting commissions and discounts, o travel and travel-related expenses (including business and first-class airfare); o legal, accounting, investment banking, consulting fees (including without limitation, fees payable to expert network consultants) and professional fees; o research-related fees and expenses; o data and information service providers (e.g., Bloomberg, Debtwire, general market research with respect to trading models and industries, etc.); and o other transaction costs.  a fund’s allocable share of costs and expenses incurred in respect of any proposed investments that are not consummated and that were not intended by the general partner to support any investment previously made by the fund such that the general partner determines that such expenses should be considered investment expenses with respect to such investment previously made, including, without limitation, fees and expenses incurred to obtain financing commitments and fees and expenses paid to legal counsel, accountants or experts retained to negotiate or document a proposed investment or to conduct due diligence reviews, in each case to the extent that with respect to any such proposed investment (i) such out-of- pocket costs and expenses are not otherwise reimbursed by an unaffiliated third party or by the subject of the proposed investment, and (ii) the proposed investment is not consummated by an affiliate of the fund nor does any such affiliate receive any material amount of compensation in connection with the consummation of such proposed investment from any person other than the fund;  compensation and other similar expenses of consultants (including local joint venture partners, industry executives, advisors, consultants, operating executives, subject matter experts or other persons acting in a similar capacity (including with respect to potential portfolio investments));  any costs and expenses incurred in connection with the carrying or management of investments, including: o custodial, trustee, record keeping and other administration fees;  expenses incurred in connection with the preparation and distribution of its tax returns, financial statements and reporting for the fund (including Schedules K-1 for fund investors);  expenses incurred in connection with tax compliance (including, without limitation, FATCA expenses related to investor due diligence, reporting, filing fees, and registration), U.K. FATCA, CRS, AEOI compliance, compliance with the Organisation for Economic Cooperation and Development country-by-country reporting requirements and compliance with any other requirements resulting from the Organisation for Economic Cooperation and Development’s ongoing Base Erosion and Profit Shifting project or similar regulatory filings;  attorneys’ and accountants’ fees and disbursements relating to fund matters;  taxes and other governmental charges levied against it;  any and all expenses (including legal fees and expenses) incurred to comply with any law or regulation related to the activities of the fund (including regulatory expenses of the general partner, if any, and the applicable filing adviser incurred in connection with reporting to regulatory authorities and preparation and making of any required regulatory filings or notice (including Form PF, U.S. Bureau of Economic Analysis or Federal Reserve Board forms, AIFMD, Form D or similar forms, MiFID II, GDPR)) or otherwise incurred in connection with any litigation or governmental inquiry related to the activities of the fund (to the extent such expenses would be indemnifiable under the fund’s operative documents), including filing and registration fees and expenses related to regulatory sweeps;  insurance premiums and other insurance costs and expenses incurred in connection with the activities of the fund, including without limitation, errors, omissions, fidelity, crime, general partner liability, directors’ and officers’ liability and similar coverage for any indemnified party;  expenses incurred in connection with its dissolution, liquidation or winding-up and termination;  expenses relating to defaults by investors in the payment of any capital contributions;  expenses incurred in connection with any restructuring or amendments to a fund’s constituent documents and related entities;  expenses incurred in connection with the formation of alternative investment vehicles to the extent permitted under the fund’s constituent documents;  expenses incurred in connection with the formation, maintenance and operation of special purpose vehicles through which the fund makes, holds or manages investments (whether such vehicles are formed as subsidiaries of the fund or as stand-alone vehicles outside of the fund, including vehicles formed in non-U.S. jurisdictions), including: o rent, o employee costs, o office expenses, o taxes and other governmental charges, o administrator fees and o professional fees incurred with respect to tax planning and tax compliance;  expenses of any administrator of the fund and any special purpose vehicles through which the fund makes, holds or manages investments (including vehicles formed in non-U.S. jurisdictions);  expenses incurred in connection with distributions to investors;  expenses incurred in connection with any meetings with investors called by the fund’s general partner (including any annual conferences), including travel (including business class airfare, or when business class is not available, first class airfare), meal and lodging expenses of the fund’s advisory board and professionals of the investment adviser incurred in connection with attending such meetings;  expenses incurred in connection with the preparation and distribution of any investor communications (including Intralinks);  expenses related to the fund’s indemnification obligations;  certain litigation expenses;  any amounts paid by the fund for, or resulting from, hedging transactions;  investment management fees;  expenses incurred in connection with compliance with side letters;  expenses relating to transfers of interests in the fund or a permitted withdrawal of an investor (but only to the extent not paid or otherwise borne by the withdrawing investor and/or the assignee of the withdrawing investor);  out-of-pocket expenses incurred by members of an independent committee in connection with the fulfillment of their duties, including without limitation, travel expenses incurred in connection with attending independent committee meetings (including, without limitation, transportation, meal and lodging expenses, including business class airfare, or when business class is not available, first class airfare);  any principal, interest on and fees and expenses arising out of, the fund’s borrowings and indebtedness (including, without limitation, the fees, and costs and expenses incurred in obtaining lines of credit, loan commitments and letters of credit for the account of the fund);  the cost and expenses associated with, and structuring fee under, a total return swap or any credit facility;  fees and expenses of any legal counsel engaged by the advisory committee of a fund;  other extraordinary expenses relating to the fund and its activities that are not investment expenses; and  such other expenses as are set forth in the fund’s private placement memorandum, limited partnership agreement and/or other operative documents. Fee income, including commitment fees, break-up fees, directors’ fees and similar income realized with respect to investments or proposed investments by a private fund, will first be applied to unreimbursed out-of-pocket expenses related to the applicable transaction; any excess amount will be used to reduce the applicable investment management fee otherwise payable by the private fund’s investors by an identical amount, or, at our discretion, be paid directly to the fund. Notwithstanding the foregoing, such fees (including directors’ fees) may be waived at our discretion. Sub-Advised Public Fund The Sub-Advised Public Fund bears its own expenses, which generally include all costs not specifically borne by the third-party investment manager, the Sub-Advised Public Fund’s distributor, Avenue U.S., the Sub-Advised Public Fund’s administrator, the Sub-Advised Public Fund’s transfer agent or other service providers, including without limitation:  expenses incurred in connection with the Sub-Advised Public Fund’s organization;  investment management and administration fees;  fees for necessary professional and brokerage services;  fees for any pricing services;  the costs of regulatory compliance; and  costs associated with maintaining the Sub-Advised Public Fund’s legal existence and shareholder relations. Separately Managed Accounts The expenses borne by separately managed accounts are set forth in their agreements with us and generally include all custodial fees, brokerage commissions, clearing fees, interest and withholding or transfer taxes incurred in connection with trading for the client’s account. For more information regarding our brokerage practices and brokerage expenses that may be incurred, please see Item 12. please register to get more info

As discussed in Item 5 above, the private funds we advise generally pay incentive allocations or carried interest, depending upon the fund’s structure. Incentive allocations or carried interest are calculated as a percentage of profits of the private funds. Some private funds pay incentive allocations, in whole or in part, on mark-to-market performance at the end of a period (year-end or upon a partial or full withdrawal), subject to a high watermark. Other private funds pay a carried interest on realized returns. In those funds, such carried interest payments are not paid to us until investors receive 100% of their capital back plus a preferred return. Incentive allocations and carried interest rates may be negotiable. Avenue U.S. also serves as a sub-adviser to a third-party investment manager in respect of the Sub- Advised Public Fund for which Avenue U.S. only receives an asset-based fee and no performance-based fee. As a result, we have a conflict of interest, because we can potentially receive greater fees from accounts having a performance fee structure than from those accounts we charge asset-based fees only. We have an incentive to:  direct the best investment ideas to, or allocate or sequence trades in favor of, the accounts that pay performance-based fees;  use trades by an account that does not pay performance-based fees to benefit accounts that do pay performance-based fees; and  benefit an account that pays performance-based fees over an account that does not pay performance-based fees and which has a different and potentially conflicting investment strategy. We have a fiduciary duty to our clients not to favor the account of one client over that of another, without regard to the types and amounts of fees paid by those accounts. In light of this, we have allocation and other policies and procedures in place to ensure that accounts are treated fairly. We seek to allocate investments among funds with similar strategies that are managed by the same investment team on a pro rata basis, targeted net asset basis or targeted total asset basis. However, as described in Item 12, under the heading “Allocation Procedures,” there are a number of reasons for which a particular transaction may not be allocated on a pro rata basis. Avenue U.S. serves as sub-adviser to the Sub-Advised Public Fund in addition to an adviser to private funds. The Sub-Advised Public Fund (indirectly) sub-advised by Avenue U.S. is not subject to a performance fee. The Sub-Advised Public Fund may invest in securities that are the same as or similar to certain investments that may be held in certain of our private funds (which do pay a performance fee). For more information regarding the allocation of investments between Avenue Capital Group’s funds, see Item 12 under the heading “Allocation Procedures.” please register to get more info

We serve as the investment manager of, and provide investment advisory services to, private investment funds (i.e., pooled investment vehicles) and may in the future serve as the investment manager of, and provide investment advisory services to, one or more managed accounts. Avenue U.S. also serves as the sub-adviser of, and provides sub-investment advisory services to, a third-party investment manager in respect of the Sub-Advised Public Fund. Neither Avenue Capital Group nor any of our affiliates is acting as an investment adviser or otherwise making any recommendation as to an investor’s decision to invest in the funds. With respect to the private funds, investment advice is provided directly to the funds and not individually to each of the funds’ limited partners or shareholders, as applicable. With respect to managed accounts, the investment objective and strategy of each client will not involve a recommendation or determination by us as to the appropriate investment program for such client nor due diligence by us as to such client’s financial condition or risk profile. With respect to the Sub-Advised Public Fund, investment advice is provided to a third-party investment manager and not individually to the Sub-Advised Public Fund’s shareholders. The funds’ investors may consist of one or more of the following: individuals, pension and profit sharing plans, financial institutions (including funds of funds), trusts, endowments, charitable organizations and corporations or other business entities. Each private fund investor or managed account client is required:  to be an “Accredited Investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933;  to be a “Qualified Client” as such term is defined in SEC Rule 205-3 under the Investment Advisers Act of 1940;  to be a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act of 1940; and  to meet such other eligibility requirements as we determine on a case by case basis. Managed account clients may consist of one or more of the following: individuals, pension and profit sharing plans, financial institutions (including funds of funds), trusts, endowments, charitable organizations and corporations or other business entities. There is no minimum size for the funds or managed accounts we advise. A majority of the private funds have minimum investment amounts ranging from $500,000 to $10,000,000. Certain private funds, however, may have higher or lower minimum investment amounts depending upon the agreement negotiated between Avenue Capital Group and a fund’s investor(s), particularly in the case of single investor funds. Subject to applicable statutory minimums, such minimum investment amounts are negotiable. The Sub-Advised Public Fund to which Avenue U.S. (indirectly) provides sub-advisory services does not have a minimum investment amount. please register to get more info

Methods of Analysis and Investment Strategies
We pursue a theme-driven, concentrated investment strategy that is analytically intensive and relies upon individual issuer, industry and macro research and analysis. In addition to conducting extensive fundamental issuer analysis, we may actively participate on creditors’ committees and steering committees. For those companies that require a restructuring (in or out of court), we may seek to influence and/or actively drive the reorganization, bankruptcy or restructuring process. Some of our investments may be long-term illiquid investments. Our goal is to select industries that are undergoing periods of rapid change and/or deterioration, which may provide significant investment opportunities as these cycles run their course. Following a disciplined, theme-based strategy allows us to pursue a relatively concentrated portfolio with a limited number of core investments. This results in a portfolio that represents a careful selection of investments within such industries rather than a broader, “indexed” approach. We employ a value investing strategy based on fundamental, proprietary research and comprehensive due diligence. Our due diligence process seeks to uncover hidden value and/or risk, thereby increasing potential returns and reducing the risk of investment loss. Avenue U.S. Avenue U.S.’s investment strategies are grouped into the following strategies and sub-strategies:  Private Funds  Distressed; o Energy o Aviation  Real Estate;  High Yield;  Performing Loans;  Private Transactions (including private credit and equity transactions); and  Sustainable Solutions.  Sub-Advised Public Fund  Distressed; and  High Yield Avenue Europe Avenue Europe’s investment strategies are grouped into the following strategies and sub-strategies:  Distressed;  Direct Lending;  High Yield; and  Private Transactions (including private credit and equity transactions). Avenue Asia Avenue Asia’s primary investment strategy is a Distressed strategy pursuant to which Avenue Asia invests in the distressed debt and undervalued debt and equity securities of companies headquartered or with a principal place of business in Asia, including Australia and New Zealand. Avenue Asia may also employ Avenue Capital Group’s Private Transactions strategy, including private credit and equity transactions, in respect of one or more funds it manages.

Avenue Credit Avenue Credit expects to employ a Distressed and High Yield investment strategy on behalf of the funds it will manage. *** Funds may use one or more special purpose vehicles to effect a fund investment or in such circumstances as Avenue Capital Group may deem appropriate, including in an effort to increase the tax efficiency of a fund investment or to enable compliance with local investment laws. Expenses related to the formation, maintenance and operation of these special purpose vehicles, including, among other things, rent, employee costs, office expenses, administrator fees and professional fees incurred with respect to tax planning and tax compliance, will be borne by the funds. Funds have the ability to use security-level leverage in respect of their investments, and certain funds invest in asset classes (derivatives and options) that include implicit leverage. Each fund also has the authority to use fund-level leverage as part of their investment strategy(ies), although most of our funds historically have not done so. Going forward, however, we expect that our funds may use leverage in a number of different ways. For a detailed description of the specific leverage restrictions with respect to a fund and/or the manner in which leverage may be employed by a fund, please refer to that fund’s offering documents. See Item 8 “Methods of Analysis, Investment Strategies and Risk of Loss – Risks Associated with Avenue Capital Group’s Investment Strategies – Use of Leverage.” Our investment strategies and certain risks associated with our investment strategies are described in this Item 8. Prospective investors in any fund(s) are advised to review the respective private funds’ private placement memorandum, explanatory memorandum, or confidential offering circular or, in the case of the Sub-Advised Public Fund, the prospectus that is included in the registration statement that has been filed with the SEC, for a more in-depth description of that fund’s investment strategy and objectives, types of assets to be invested in, investment restrictions (if any), and related risk factors. Distressed Strategy Avenue U.S., Avenue Europe and Avenue Asia Each of Avenue Capital Group’s filing advisers (other than Avenue Credit) focuses primarily on a variation of Avenue Capital Group’s Distressed strategy (and, if applicable, a sub-strategy). As a general matter:  Avenue U.S.’s Distressed strategy focuses on the distressed debt and undervalued securities of portfolio companies headquartered or with principal places of business in the United States and Canada as well as claims of creditors against bankrupt debtors. Notwithstanding, investments may be made outside North America. As a general matter, Avenue U.S.’s Distressed strategy may also invest in real estate debt or equity.  Avenue Europe’s Distressed strategy focuses on the distressed debt and undervalued securities of European companies or non-European companies that have issued European denominated securities.  Avenue Asia’s Distressed strategy generally focuses on investments in the debt, equity or other securities, including indebtedness or other obligations, of Asian companies.

Avenue Capital Group’s Distressed strategies generally focus on investments in the debt, equity or other securities, including indebtedness or other obligations, as applicable, of U.S., European and/or Asian:  companies in financial distress or undergoing a turnaround;  companies in bankruptcy, restructuring, reorganization or liquidation;  companies in industries that are in turmoil;  companies that are undervalued because of discrete extraordinary events or economic conditions;  companies whose securities Avenue Capital Group believes to be undervalued or are being sold for less than their intrinsic value;  companies experiencing operational or financial difficulty in which Avenue Capital Group anticipates a turnaround; and  companies that are operationally sound, but financially troubled due to overleveraged balance sheets, inadequate capitalization or limited access to capital. Avenue Capital Group’s Distressed strategies generally target:  bank debt;  event-driven situations;  claims;  distressed securities, including distressed debt;  high-yield debt;  restructured and post-reorganization equities;  performing/restructured debt;  non-performing loans; and  viable companies generating positive cash flow. Avenue Capital Group typically does not seek to gain operational control of companies it invests in, but may have operational control of such companies from time to time. Investments are generally expected to be made in senior secured debt or other debt that is structurally senior to other portions of the capital structure. However, as market cycles evolve, Avenue Capital Group’s Distressed strategies may seek to invest in more junior portions of the capital structure depending on the risk return profiles of an investment. In addition, the funds that employ Avenue Capital Group’s Distressed strategies may act as lenders originating floating rate and fixed rate loans. In pursuing its Distressed strategy, Avenue Capital Group’s filing advisers:

 typically invest in creditor-friendly jurisdictions;  seek to create investments at low valuations, including undervalued securities or assets being sold at a discount by non-economic sellers, including single assets or concentrated pools of assets;  purchase securities denominated in benchmark currencies;  devote significant time and resources to researching the bankruptcy laws and precedents of the various jurisdictions within Avenue Capital Group’s investment mandate to determine the creditor protections of each locale;  maximize risk-adjusted returns through investing in debt securities that are senior in the capital structure, often with first lien status, and, as a result, generally have less volatility than subordinated securities;  pursue active, but non-control investments;  focus on companies in asset rich industries or industries with predictable cash flows;  actively manage the portfolio by tactically allocating assets across industries and countries;  leverage their network of local investment, legal, and accounting professionals to source and execute investment opportunities and engage in active portfolio management; and  in addition to seeking special situations, focus on investments in debt and equity across industries, sectors and geography. Avenue Capital Group’s various investment teams conduct comprehensive due diligence of fundamental aspects of potential Distressed investments including some or all of the following:  business fundamentals, including analysis of both individual companies and the industries in which they operate;  valuation, including going concern and liquidation values;  legal issues;  capital structure and off-balance sheet liabilities; and  expected recovery on non-performing loans. Distressed Sub-Strategies Avenue U.S., Avenue Europe and Avenue Asia also employ Avenue Capital Group’s Distressed strategy as part of multiple sub-strategies, including Energy and Aviation with respect to Avenue U.S., and Private Transactions with respect to Avenue U.S., Avenue Europe and Avenue Asia, each of which are described in greater detail below. Energy Sub-Strategy Avenue U.S.’s Energy sub-strategy focuses primarily on individual corporate, distressed debt securities and other special situations investment opportunities, including, without limitation, private equity opportunities of North American energy and utility companies and are generally expected to employ Avenue U.S.’s Distressed, High Yield and Private Transactions strategies. The Energy sub-strategy may also invest opportunistically in a limited number of select European energy and utility companies in financial stress or distress, leveraging the experience and resources of Avenue Europe. Aviation Sub-Strategy Avenue U.S.’s Aviation sub-strategy expects to make investments primarily in select aircraft and aviation related hard and soft assets. Investments are expected to focus primarily on special situations investment opportunities in global aircraft and aviation assets and companies, and investments are generally expected to be made in hard assets such as aircraft, engines, and parts, as well as soft assets such as leases, equipment trust certificates, aircraft mortgages and other aircraft and aviation related investments. The Aviation sub-strategy may also seek to invest in the securities of airline companies and affiliates (before or after such companies have declared bankruptcy). Funds utilizing the Aviation sub-strategy will also seek to lend, on a secured basis, to operators or lessors, where the present value of the leases or the equivalent rental value and residual values result in loan to values acceptable to Avenue U.S. High Yield Strategy Avenue U.S. and Avenue Europe Avenue U.S.’s and Avenue Europe’s High Yield strategies seek to generate a high level of current income and capital appreciation by opportunistically investing primarily in credit obligations, including senior secured floating rate and fixed rate loans and high yield bonds (including non-investment grade bonds, speculative grade bonds and junk bonds) of U.S. or European issuers, respectively, which operate in a variety of industries, and in companies that Avenue U.S. or Avenue Europe believe have strong leadership, stable cash flow and improving credit performance. Avenue U.S.’s and Avenue Europe’s High Yield strategies are expected to focus on investments in senior secured debt or other debt that is structurally senior to other portions of the capital structure for purposes of financing or refinancing investment opportunities of the United States or European countries, as applicable. However, as market cycles evolve, Avenue U.S. or Avenue Europe may seek to invest in more junior portions of the capital structure, depending on the risk return profile of the investment. Avenue Europe’s High Yield strategy may also incorporate aspects of the Direct Lending sub-strategy described below. See Item 8 under the heading “Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis and Investment Strategies –Direct Lending.” Direct Lending Avenue Europe’ Distressed and High Yield strategies also employ a Direct Lending sub-strategy, which investment objective is to generate current income and capital appreciation generally by providing senior- secured, medium-term loan financing primarily to middle-market companies that are headquartered or have their principal place of business in Europe or whose operating revenue is generated primarily in Europe or that have issued securities or other financial instruments denominated in a European currency. Investments are expected to be made in: (i) companies that are currently unable to access traditional bank financing; (ii) companies seeking acquisition, investment capital and/or working capital; (iii) companies that are in need of refinancing or liquidity; (iv) new leveraged buyout financings; and (v) companies seeking capital to execute and complete financial restructurings. Investments by funds utilizing Avenue Europe’s Direct Lending sub-strategy are expected to be made primarily in individual corporate loans for financing or refinancing investment opportunities of European companies. Investments are anticipated to be made primarily in senior secured debt or other debt that is structurally senior to other portions of the capital structure. Funds employing Avenue Europe’s Direct Lending sub-strategy may utilize limited leverage, depending upon Avenue Europe’s risk perception of the portfolio, the availability and cost from financing providers and other factors. *** Avenue Capital Group may use fund-level leverage as part of its Distressed strategy or any of its sub- strategies and we also invest in asset classes (derivatives and options) that include implicit leverage. See Item 8 under the heading “Methods of Analysis, Investment Strategies and Risk of Loss – Methods of Analysis and Investment Strategies.” In addition we expect that funds will, from time to time, borrow capital in lieu of drawing down capital commitments and apply subsequent drawdowns to repay such borrowings and interest thereon (“administrative borrowings”). Performing Loans Strategy Avenue U.S.’s Performing Loans strategy seeks attractive rates of return and capital appreciation primarily in first or second lien secured bank loans in leveraged, non-investment grade companies on a levered basis. Avenue U.S.’s Performing Loans strategy will primarily target the United States and, to a lesser extent, Europe. Avenue U.S.’s Performing Loans strategy generally focuses on:  large cap companies with attractive growth prospects with a particular focus on less cyclical sectors;  investing at the top of the capital structure with collateral protection and with the use of leverage; and

 being opportunistic across market cycles.

Avenue U.S.’s Performing Loans strategy generally targets:

 senior secured first lien bank loans;

 junior secured second lien loans; and

 unfunded revolvers.

Private Transactions Strategy Avenue Capital Group’s Private Transactions strategy seeks to generate current income and capital appreciation by investing in situations where it can provide capital and guidance to businesses in various industries that are headquartered in or principally operating in Europe and the U.S. Avenue Capital Group’s Private Transactions strategy generally focuses on:  companies that are undergoing transition due to a change-of-control transaction, refinancing or restructuring;  companies that are having trouble accessing the capital markets; and  companies that are undervalued because of discrete extraordinary events. The Private Transactions strategy generally invests in:  common equity;  preferred stock;  payment-in-kind (PIK) notes;  bonds;  mezzanine debt;  second lien debt; and  senior debt. The Private Transactions strategy is not presently the primary investment strategy of any fund managed by Avenue Capital Group. Rather, this strategy may be leveraged in connection with particular investments made by the funds managed by Avenue Capital Group and is currently employed in connection with a fund managed by Avenue Europe. Real Estate Strategy Avenue U.S.’s Real Estate strategy seeks U.S.-focused opportunistic real estate investments. Investments may take the form of, or include, among others:  direct or indirect interests in real property;  joint ventures and other vehicles for the acquisition of real estate assets (including the acquisition of debt and equity interests in joint ventures);  acquisition or origination of mezzanine debt, mortgage loans and other real estate-backed indebtedness and other indebtedness of entities that own interests in real estate or are otherwise engaged in real estate-related businesses; and  investments in public or private real estate investment trusts, pooled investment funds or other real estate-related companies (including management, brokerage, development, financing or other operating companies). The Real Estate strategy’s investment focus includes, among others, residential, office, retail, industrial and hotel properties. Avenue U.S.’s private funds that pursue the Real Estate strategy may have primary management responsibility over certain of the real estate assets in which they invest. In some instances, Avenue U.S. may invest with, or lend to, operating partners who will have primary responsibility for the day-to-day execution of the investment business plan for a particular real estate asset. Avenue U.S. may also co-invest with other financial partners with whom Avenue Capital Group and its affiliates have strong relationships. The Real Estate strategy generally focuses on:  situations, as opposed to trends, as well as complex “difficult to understand” transactions;  residential, office, retail, hotel and industrial properties; and  value-added, redevelopment, special situation or independently sourced opportunities. Avenue U.S.’s Real Estate strategy investment professionals focus on real estate investments and institutional-quality underwriting. Investments may include, without limitation, activist and joint venture opportunities. The strategy may also purchase real estate-related non-performing and performing debt, partnership interests, or public securities. The strategy may also provide liquidity to recapitalizations and may invest in distressed situations that allow for turnaround opportunities. As a general matter, Avenue U.S. does not use fund-level leverage as part of its Real Estate strategy, although it may in the future. However, Avenue U.S. may use leverage in connection with the financing of a fund’s investment transactions. Sustainable Solutions Strategy Avenue U.S.’s Sustainable Solutions strategy seeks credit-oriented investments primarily in private, middle-market companies and related projects that may advance select social and environmental impact themes while generating attractive risk-adjusted returns and current income. The Sustainable Solutions strategy generally focuses on:  companies seeking direct financing;  companies that are in growth stage; and  companies and projects in line with U.N. Sustainable Development Goals. The Sustainable Solutions strategy generally targets:  private credit opportunities;  senior secured lending;  second lien debt;  mezzanine debt; and  private equity and warrants. Investments are expected to be made primarily in investment opportunities within Avenue U.S.’s areas of focus, which may include (i) sustainable infrastructure, (ii) resource efficiency, (iii) agriculture and water resources, (iv) climate change mitigation, (v) clean energy, and (vi) safety and security.

*** Certain funds have agreed in their governing documents to use fund-level leverage, as described in greater detail in their offering documents, in connection with the financing of a fund’s investment transactions. Avenue Capital Group may use fund-level leverage as part of its strategies and Avenue Capital Group also invests in asset classes (derivatives and options) that include implicit leverage. Prospective investors in any of our funds employing any of Avenue Capital Group’s investment strategies discussed above are advised to review the fund’s offering documents for a more in-depth description of that fund’s investment strategy and objectives, types of assets to be invested in, investment restrictions (if any) and related risk factors. Public Fund Strategy Sub-Advised Public Fund The Sub-Advised Public Fund employs a “multi-manager” strategy whereby a third-party investment manager allocates the Sub-Advised Public Fund’s assets among professional money managers (such as Avenue U.S.), each of which is responsible for investing its allocated portion of the Sub-Advised Public Fund’s assets. The third-party investment manager may also invest a portion of the Sub-Advised Public Fund’s assets in shares of one or more exchange-traded funds, which use a passive management (i.e., index-tracking) strategy. Avenue’s Public Fund Strategy employs a combination of the Distressed, High Yield and Performing Loans strategies with respect to the Sub-Advised Public Fund. Prospective investors in the Sub-Advised Public Fund are advised to review the prospectus that is included in the registration statement that has been filed with the SEC for a more in-depth description of that fund’s investment strategy and objectives, types of assets to be invested in, investment restrictions, and related risk factors.
Risks Associated with Avenue Capital Group’s Investment Strategies
The investment strategies described above that we use for the funds cover a wide range of investment types. Material risks involved in our investment strategies are described below. Certain risks outlined below are specific to certain investment strategies and therefore are relevant to certain funds to the extent that they may employ such strategy(ies). Prospective investors in any fund are advised to review the private fund’s confidential offering memorandum or confidential offering circular or, in the case of the Sub-Advised Public Fund, the prospectus that is included in the registration statement that has been filed with the SEC, for a more in-depth description of that fund’s risk factors. Conflicts of Interest As set forth in each fund’s confidential offering memorandum or confidential offering circular, as applicable, an investment in a fund or managed account involves certain potential conflicts of interest, which may include those described below.
Other Clients. In addition to responsibilities with respect to the management and investment activities of
any particular fund or managed account, Avenue Capital Group will have similar responsibilities with respect to various other existing and future pooled investment vehicles and client accounts. The existence of such multiple vehicles and accounts necessarily creates a number of potential conflicts of interest.
Investment Activities of Funds and Other Clients; Allocation of Investment Opportunities Among
Funds and Other Clients. Avenue Capital Group conducts the various funds’ investment programs in a
manner that is similar to the investment programs of other clients, particularly where the investment objectives and policies of various clients overlap. As a result, there may be conflicts between clients with respect to the allocation of investment opportunities. See Item 12 (“Brokerage Practices”) below for a description of how we address such potential or actual conflicts.
Combined Orders. If Avenue Capital Group has determined to invest at the same time for one or more
clients, Avenue Capital Group will generally place combined orders for all such accounts simultaneously and if all such orders are not filled at the same price, it will generally average the prices paid. Similarly, if an order on behalf of more than one fund or client cannot be fully executed under prevailing market conditions, Avenue Capital Group will allocate the investments among the different funds or clients on a basis that it considers equitable. Situations may occur where a fund or client could be disadvantaged because of the investment activities conducted for other funds or clients. Standing Information Barrier. Avenue U.S. has implemented an information barrier to prevent the transmission of material nonpublic information among different groups within Avenue Capital Group, specifically to wall of Avenue U.S.’s Performing Loans strategy from Avenue U.S.’s and Avenue Capital Group’s other investment professionals. Without an information barrier, certain funds could be precluded from trading based on the information inadvertently received by the Performing Loans strategy. Implementation of the information barrier reduces the likelihood of material nonpublic information being obtained by or from the Performing Loans strategy, thus reducing the possibility of restricting trading activities of the funds and increasing their ability to perform their normal business activities without interruption. Notwithstanding the foregoing, Avenue Capital Group and/or one of its affiliates may from time to time establish one or more additional information barriers around one or more strategy groups within Avenue U.S. and/or Avenue Capital.
Time Commitment. Avenue Capital Group and its affiliates are not obligated to devote any specific
amount of time to the affairs of any fund or managed account. Avenue Capital Group’s affiliates, including Avenue U.S., Avenue Europe, Avenue Asia and Avenue Credit spend substantial time on other business activities, including those related to the other Avenue clients (as defined herein). Avenue Capital Group’s Senior Principals and their affiliates currently engage in and will be free to continue to engage in outside business activities as well as investment activities for their own accounts.
Agreements with Certain Investors in Private Funds. The funds, Avenue Capital Group and their
respective affiliates have and may from time to time in the future enter into agreements with one or more investors whereby in consideration for agreeing to invest certain amounts in a fund and other consideration deemed material to the fund, such investors have in the past, and may in the future, be granted rights not otherwise afforded to other investors, including, without limitation, the right to receive reports from the fund on a more frequent basis or to receive reports that include information not provided to other investors, the right to pay a reduced carried interest and/or investment management fee, the right to receive a share of the carried interest and/or investment management fee earned by Avenue Capital Group or its affiliate and such other rights as may be negotiated between the funds, Avenue Capital Group and their respective affiliates, on the one hand, and such investor, on the other hand. Such agreements will have the effect of establishing rights under, or altering or supplementing the terms of, the fund’s constituent documents with respect to such investors. To the extent that compliance with any of the provisions of any such agreements would cause the funds, Avenue Capital Group or any of their respective affiliates to violate their respective fiduciary duties or obligations or to violate any applicable laws, any non-compliance with any such provision will not be deemed to be a breach of such agreements.
Agreements with Certain Managed Account Clients and Single Member Funds. Avenue Capital
Group and its affiliates may provide advice to one or more clients that invest side-by-side (i.e., in parallel) with one or more of the funds managed by Avenue Capital Group. The agreements entered into with clients grant rights not afforded to other clients or to fund investors. Such rights may include, without limitation, increased transparency (e.g., the right to receive reports regarding the client on a more frequent basis or to receive reports that include information not provided to other clients or fund investors), the right to withdraw capital on a more frequent basis than other clients or fund investors, the right to terminate the relationship on short notice and such other rights as may be negotiated between Avenue Capital Group and its affiliates, on the one hand, and such client, on the other hand. In addition, the fees and expenses paid by such clients may be less, in some cases substantially less, than those paid by other clients or by the funds and the investors in the funds. Such clients may seek to liquidate investments upon termination of their respective investment management agreements in situations where Avenue Capital Group may be unable to liquidate the account’s portfolio holdings and/or where liquidation of the account’s portfolio holdings is not in the best interest of Avenue Capital Group’s other clients. To the extent that compliance with any of the provisions of any client agreement would cause Avenue Capital Group or any of its affiliates to violate its respective fiduciary duties or obligations or to violate any applicable laws, any non-compliance with any such provision will not be deemed to be a breach of such agreements.
Transactions with Affiliates. A client may engage in transactions with Avenue Capital Group or its
affiliates. Avenue Capital Group may cause a fund or managed account to engage in cross trades. Such transaction will be on terms no less advantageous to the fund than are available from unaffiliated persons. Notwithstanding the foregoing, a fund may enter into tax lien servicing arrangements with an affiliate of Avenue Capital Group without regard to the terms of such arrangements. In addition, from time to time, Avenue Capital Group or an affiliate may post the purchase price of a fund investment that is ultimately reimbursed by the applicable fund. Avenue Capital Group may cause a fund to engage in cross-trades for any number of reasons, including, without limitation, any reasons disclosed Item 11 under the heading “Code of Ethics, Participation or Interest in Client Transactions and Personal Trading – Participation or Interest in Client Transactions” or to be consistent with the investment and operating guidelines of the funds. In addition, from time to time, currencies to be bought or sold by a fund may be suitable for purchase by one or more of the other clients of Avenue Capital Group and vice versa. In such circumstances, if Avenue Capital Group determines in good faith that the transaction is in the best interest of the fund and each such other client, the currencies may be transferred at market value between the fund and such other client(s). The Senior Principals and their affiliates will not receive a commission directly or indirectly in connection with such cross-trade. From time to time, Avenue Capital Group, on behalf of a fund, may receive offers to purchase certain assignments of, or participations in, loans or notes (or interests therein) which clients of Avenue Capital Group own (including loans in whose origination such clients or Avenue Capital Group may have been involved). In the event of such an offer, the price of the participation of assignment of the loan or notes (or interest therein) will not solely be set by Avenue Capital Group or the fund but rather will be established based on third-party valuations obtained in accordance with the procedures followed by the funds, applied on a consistent basis. In connection with each such proposed transaction, Avenue Capital Group will prepare the materials it deems necessary to describe the transaction to the fund. The decision to accept or decline the offer, at the price offered, will, however, be made by a separate committee which will be retained by the fund and will consist of one or more members, after a review of the materials prepared by Avenue Capital Group regarding the proposed transaction plus any additional information requested by the committee. The committee will consist of one or more persons with substantial experience and knowledge of the loan market and related investment arenas who are independent of Avenue Capital Group. The initial member or members of the committee will be appointed by Avenue Capital Group. Following such initial appointment, if all members of the committee subsequently resign or are otherwise removed, Avenue Capital Group may appoint one or more additional members thereto.
Related Party Transactions. An independent committee will have the right to, on behalf of investors
and funds, approve or disapprove, certain related party transactions and any other matter as to which approval may be required under the Advisers Act, including Sections 205(a) and 206(3) thereof. In no event will any such transaction be entered into unless it complies with applicable law.
Discounted Products and Services from Portfolio Companies. Certain portfolio companies may offer
product and service discounts from time to time to employees of Avenue Capital Group and its affiliates. For example, in order to encourage greater knowledge and understanding of their products and services, or as a general matter for friends and family, certain hospitality-related portfolio companies of a fund and other clients from time to time provide discounted hotel room rates to employees of Avenue Capital Group and its affiliates.
Valuation. The investment professionals of Avenue Capital Group, including the portfolio managers of a
fund, may provide input during the valuation process, including, without limitation, at the valuation committee meetings. Such investment professionals maintain an interest in the valuation of a fund’s assets. However, such investment professionals, including the portfolio managers of the fund, shall not participate in the final determination of the valuation of the fund’s assets.
Investments Involving Other Clients. A client may, from time to time, make an investment in a
portfolio company in which one or more other clients invests in a different part of the capital structure. There may be instances where such a portfolio company may become insolvent or bankrupt and where a fund’s and Avenue Capital Group’s other clients’ interests in such portfolio company may conflict. Moreover, there may be situations in which a fund determines to invest in an issuer in which another fund managed by Avenue Capital Group or its affiliate(s) maintains an investment, so long as Avenue Capital Group or its affiliate(s) determine that the investment made by the fund(s) is appropriate for, and falls within the investment guidelines of, such fund(s). Furthermore, a private fund may invest in the interests of another private fund managed by Avenue Capital Group and/or its affiliate(s). To the extent that a fund holds securities in a portfolio company with rights, preferences and privileges that are different than those held by other clients in the same portfolio company, Avenue Capital Group and its affiliates may be presented with decisions when the interests of a fund and Avenue Capital Group’s other clients are in conflict. It is possible that in a bankruptcy proceeding, out-of-court restructuring or other corporate action, a fund’s interest may be subordinated, restricted in some manner or otherwise adversely affected by virtue of Avenue Capital Group’s other clients’ involvement and actions relating to its investment including, without limitation, the inability to conduct a transaction in an issuer or an instrument in a fund at a time when Avenue Capital Group would otherwise seek to conduct such transaction. There may be conflicts between clients with respect to voting the securities of such issuers and other matters relating to various investments. See Item 11 (“Code of Ethics, Participation or Interest in Client Transactions and Personal Trading – Participation or Interest in Client Transactions”) and Item 17 (“Voting Client Securities”) for a description of how Avenue Capital Group addresses such potential or actual conflicts. Follow-On Investments. The funds may be called upon to make investments in an existing portfolio company (or any of its affiliates or subsidiaries) that in Avenue Capital Group’s determination is necessary to preserve, protect or enhance the value of an existing investment in such portfolio company. There can be no assurance that the funds will be able to make such investments, including, among other reasons, because the funds will have sufficient funds to do so or because the fund’s offering documents prohibit such investment. Any decision not to make such investment could potentially have a substantial negative impact on an investment in a portfolio company. Moreover, to the extent that a fund does not make such investment in a company, such company may seek capital from other investors. Any such arrangements with other investors could rank senior to, and/or cause the dilution of, or otherwise negatively impact, the investment of the fund. In addition, Avenue Capital Group may determine to make a follow-on investment in a portfolio company in which one or more funds previously invested using assets from one or more new funds so long as Avenue Capital Group determines that the follow-on investment made by the new fund(s) is appropriate for, and falls within the investment guidelines of, such fund(s), notwithstanding that the new investment will have rights, preferences and privileges that are senior to the existing investment.
Diverse Investment Management Firm. Avenue Capital Group engages in a broad range of investment
management activities, including sponsoring and managing other pooled investment vehicles, client accounts and other activities. Although the relationships and activities of the Avenue Capital Group managers should enable these entities to offer attractive opportunities and services to their clients, such relationships and activities, in the ordinary course of business, may also give rise to circumstances in which the interests of these entities and other affiliates of the Avenue Capital Group managers conflict with the interests of certain of Avenue Capital Group’s clients, including, without limitation, competition with other investment vehicles (proprietary or third-party managed) in which clients may have an interest, purchasing and selling investments in entities in which clients may have an interest, or taking or advocating positions in certain transactions that may be considered adverse to the interests of certain clients. The Avenue Capital Group managers effectively may engage in opposite transactions with respect to a particular investment (e.g., one Avenue Capital Group client may acquire a long position in a security on behalf of an Avenue Capital Group client while one or more of the other Avenue Capital Group clients sells or shorts the security).
Other Activities. Avenue Capital Group and its affiliates are not required to manage the investments of
any particular client as their sole and exclusive function and each may engage in other business ventures and other activities unrelated to the affairs of any client, including directly or indirectly purchasing, selling, holding or otherwise dealing with any securities for the account of other investment funds, for their own accounts or for the accounts of family members or other clients. Without limiting the foregoing, Avenue Capital Group’s Senior Principals and employees, including the Portfolio Managers, invest in, participate on advisory boards of and/or provide other services to, funds that are unaffiliated with Avenue Capital Group and its family of funds. Avenue Capital Group and its Senior Principals and employees, including the Portfolio Managers, may become aware of business opportunities in which clients will not be given an opportunity to participate.
Investment Management Fee; Incentive Allocation and/or Carried Interest. The investment
management fees and the incentive allocations or carried interest borne by funds have generally not been established on the basis of an arm’s-length negotiation between the fund, on the one hand, and Avenue Capital Group or its affiliates, on the other hand. However, Avenue Capital Group believes that the investment management fees, and the terms of the incentive allocations or carried interest, generally reflect prevailing market terms. The existence of an incentive allocation or carried interest may create an incentive for Avenue Capital Group to cause a fund to make, more speculative investments than it would otherwise make in the absence of such performance-based compensation. In addition, the investment management fees for some of our funds that are structured like private equity funds may be charged on capital contributions that have not yet been invested or redistributed. Other private equity structured funds pay management fees on drawn capital only, which may create an incentive for a fund to draw down capital more quickly. Although an incentive allocation or carried interest, such as is paid to the general partners of certain of our private funds, has largely become a customary standard for private investment funds, this type of relative allocation of profits and losses can be characterized as creating an incentive to the general partner for speculative investment and thus a potential conflict with the interests of the limited partners. In addition, since the incentive allocation of certain of our private funds (i.e., our hedge funds) is based upon portfolio gains, both realized and unrealized (net of realized and unrealized losses), it is possible that the general partner may receive an incentive allocation based upon unrealized appreciation in particular positions that was not in fact achieved upon disposition of such positions. Further, while the general partner is entitled to receive an incentive allocation based upon the realized and unrealized net profits initially allocated to each limited partner, it is allocated net losses solely on the basis of its invested capital. For more information regarding certain categories of fee income, including without limitation, break-up fees, please see Item 5 under the heading “Fees and Compensation – Expenses – Funds.”
Diverse Investors. Each fund’s investors may include taxable and tax-exempt entities and persons or
entities resident of or organized in various jurisdictions. As a result, conflicts of interest may arise in connection with decisions made by Avenue Capital Group or an affiliate that may be more beneficial for one type of investor. In making such decisions, Avenue Capital Group and its affiliates intend to consider the investment objectives of the fund as a whole, not the investment objectives of any investor individually.
Minority Investor in Avenue Capital Group. In the ordinary course of a fund’s investment activities,
from time to time the fund may enter into transactions with parties related to Morgan Stanley, which is a minority investor in certain entities that are part of Avenue Capital Group. Such transactions may include, among other things, consulting services, prime brokerage, custodial and ISDA counterparty services and/or the fund purchasing securities from, or settling trades with, a party related to Morgan Stanley.
Tax Risks. The funds and/or investors could become subject to additional or unforeseen taxation in
jurisdictions in which the funds operate and invest. Changes to taxation treaties (or their interpretation) between the U.S. and the countries in which the funds invest may adversely affect the funds’ ability to efficiently realize income or capital gains. There are a number of uncertainties in the tax laws relating to certain distressed assets. There can be no assurance that the position adopted by the funds with respect to the characterization of a particular distressed asset, or the timing and characterization of income and losses associated with such asset, will be respected by the IRS or a court, or the taxing authorities in other countries, and any recharacterization by such authorities, if successful, could adversely affect the investors’ investments in the funds. FATCA. Sections 1471 to 1474 of the Code (together with the Common Reporting Standard (“CRS”) issued by the Organisation for Economic Cooperation and Development, any associated legislation, regulations or guidance or similar legislation, regulations or guidance enacted in any other jurisdiction as well as any intergovernmental agreements and other laws of other jurisdictions with similar effect, “FATCA”) impose a withholding tax of 30% on certain U.S. source payments made to foreign financial institutions, their affiliates and certain other foreign entities, unless the payee institution agrees to comply with new reporting requirements for foreign accounts owned by U.S. individuals or U.S.-owned foreign entities or is otherwise required to do so pursuant to an intergovernmental agreement. Under the applicable regulations, FATCA withholding applies to certain U.S. source payments. Investors in the funds may be required to provide certain information to the funds so that they can comply with these requirements, including certifications by non-U.S. investors as to the beneficial ownership and the U.S. or non-U.S. status of their beneficial owners. An investor that fails to provide required information may be subject to consequences under FATCA and the fund’s operative agreements, including withholding, transfer of its interest, redemption of its interest, assignment of its interest to an alternative investment vehicle, special allocations of withholding taxes imposed with respect to a fund’s income, and indemnification obligation for costs or expenses arising out of such failure.

Holding Period Requirements for Long-Term Capital Gain. Non-corporate U.S. persons (including the owners of Avenue Capital Group) are subject to U.S. federal income tax on long-term capital gain at rates that are substantially lower than the rates applicable to ordinary income or short-term capital gain. In general, gain from the disposition of an investment of the funds held for more than one year will be treated as long-term capital gain. Under new U.S. federal tax legislation enacted into law on December 22, 2017 (the “2017 Tax Act”), however, gain in respect of the incentive allocations or carried interest will generally be treated as short-term capital gain unless the funds’ holding period in the relevant investment is more than three years. The 2017 Tax Act does not change the required holding period for long-term capital gain for investors in the Funds, which remains one year. As a consequence, conflicts of interest may arise between the interests of Avenue Capital Group and the interests of the investors in connection with Avenue Capital Group’s investment-related determinations. Such determinations include, but are not limited to, decisions with respect to the development, acquisition or consummation, ownership, maintenance, restructuring, monitoring, hedging, disposition or monetization of the funds’ investments. Prospective investors should consider these potential conflicts in making their investment decisions and understand that Avenue Capital Group’s determinations may be influenced, in part, by the tax treatment of capital gain in respect of the incentive allocation or carried interest. Risks Related to Our Investment Strategies
Risks Associated With Market Conditions and Investment Opportunities
General Economic Conditions and Recent Events. Various sectors of the global financial markets
have been experiencing periods of reduced liquidity, greater volatility, general widening of credit spreads and a lack of price transparency. The short- and longer-term impact of these events is uncertain, but could have a material effect on general economic conditions, consumer and business confidence and market liquidity. Investments made by a fund are expected to be sensitive to the performance of the overall economy. A negative impact on economic fundamentals and consumer and business confidence would likely increase market volatility and reduce liquidity, both of which could have a material adverse effect on the performance of a fund and these or similar events may affect the ability of a fund to execute its investment strategies.
Economic and Political Risks of Investments in the United States, Europe and Asia. A portion of
the assets of one or more funds managed by Avenue Capital Group may invest in the United States, Europe and/or Asia. There is often a high degree of government regulation in the economies of the United States, Europe and Asia, including in the securities markets. Action by such governments may directly affect foreign investment in securities in those countries and may also have a significant indirect effect on the market prices of securities and of the payment of dividends and interest. Changes in policy with regard to taxation, fiscal and monetary policies, repatriation of profits and other economic regulations are possible, any of which could have an adverse effect on private investments. The economies of the United States, Europe and Asia may differ favorably or unfavorably from each other and other economies with regard to the rate of growth of gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments. The U.S. government and governments in certain of the countries in Europe and Asia participate to a significant degree, through ownership interests or regulation, in their respective economies. Action by these governments could have a significant adverse effect on market prices of securities and payment of dividends. The economies of certain countries depend heavily on international trade and can be adversely affected by the enactment of trade barriers or changes in the economic conditions of their trading partners. With respect to certain countries, there may be the possibility of expropriation or confiscatory taxation, political, economic or social instability, limitation on the removal of funds or other assets or the repatriation of profits, restrictions on investment opportunities, the imposition of trading controls, withholding or other taxes on interest, capital gain or other income, import duties or other protectionist measures, various laws enacted for the protection of creditors, greater risks of nationalization or diplomatic developments which could adversely affect the investments or interests of the fund in those countries. Changing political environments, regulatory restrictions, and changes in government institutions and policies in the United States, Europe and Asia could adversely affect private investments. Civil unrest, ethnic conflict or regional hostilities may contribute to instability in the United States and some countries of Europe and Asia. Such instability may impede business activity and adversely affect the environment for foreign investments. We do not intend to obtain political risk insurance on behalf of the funds. Actions in the future of the U.S. government and/or one or more European and Asian governments could have a significant effect on the various economies, which could affect market conditions, prices and yields of securities in a fund’s portfolio. Political and economic instability in the United States and any of the countries in Europe or Asia in which a fund invests could adversely affect the fund’s investments. Laws affecting international investment and business in the United States, Europe and Asia also continue to evolve, although at times in an uncertain manner that may not coincide with local or accepted international practices. Laws and regulations, particularly those concerning investment and taxation, can change quickly and unpredictably. Inconsistencies and discrepancies among the vast number of local, regional and national laws, the lack of judicial or legislative guidance on unclear or conflicting laws and broad discretion on the part of government authorities implementing the laws produce additional legal uncertainties. The burden of complying with changing and conflicting laws may have an adverse impact on the operations of the funds.
Currency and Exchange Rate Risks. The funds may invest in securities denominated in various
currencies of the countries in the Asian and European region, whereas the capital subscriptions for certain funds are denominated in U.S. Dollars or Euros and the funds’ assets will be valued in U.S. Dollars or Euros. The funds may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies and the U.S. Dollar or Euro, as well as the transaction costs associated with converting foreign currencies into U.S. Dollars or Euros. Changes in foreign currency exchange rates may also affect the value of dividends and interest earned, and the level of gains and losses realized on the sale of such investments. The rates of exchange between the U.S. Dollar or Euro and other currencies are affected by many factors, including forces of supply and demand in the currency markets. Exchange rates also are affected by the international balance of payments and other economic and financial conditions, government intervention, speculation, and other factors. The funds may, but are not required to, engage in currency hedging. The funds may benefit from the use of such currency hedging mechanisms; however, such mechanisms may result in losses for the funds and an overall poorer performance for the funds than if they had not entered into such currency hedging transactions. Additionally, there can be no assurance as to the success of any hedging arrangements that the funds may implement, and there can be no assurance that adequate hedging arrangements will be available on an economically viable basis.
Non-U.S. Investments. Non-U.S. investments may involve certain special risks, including the following:
 political, social or economic instability;  the unpredictability of international trade patterns;  the possibility of non-U.S. governmental actions such as expropriation, nationalization or confiscatory taxation;  the imposition or modification of exchange controls; price volatility;  the imposition of withholding taxes on dividends, interest and gains;  fluctuations in currency exchange rates;  different bankruptcy laws and customs; and  different legal systems and laws relating to creditors’ rights. As compared to U.S. entities, non-U.S. entities generally:  disclose less financial and other information publicly,  may be subject to less stringent and less uniform accounting, auditing and financial reporting standards and  may be subject to less stringent regulatory oversight. Also, it may be more difficult to obtain and enforce legal judgments against non-U.S. entities than against domestic entities. Non-U.S. markets also have different clearance and settlement procedures which in some markets have at times failed to keep pace with the volume of transactions, thereby creating substantial delays and settlement failures that could adversely affect the funds’ performance. Greater tax risks and complexities also may be associated with these investments. The foreign securities in which the funds may invest may be issued by companies or governments located in emerging market countries. Compared to the United States and other developed countries, emerging market countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities. Securities issued by companies or governments located in emerging market countries tend to be especially volatile and may be less liquid than securities traded in developed countries. The funds are not obligated to engage in any currency hedging operations and there can be no assurance as to the success of any hedging operations that the funds may implement.
Market Disruptions. The funds may incur major losses in the event of market disruptions and other
extraordinary events in which historical pricing relationships (on which we base a number of the funds’ trading positions) become materially distorted. The risk of loss from pricing distortions is compounded by the fact that in disrupted markets many positions become illiquid, making it difficult or impossible to close out positions against which the markets are moving. Certain of Avenue Capital Group’s previous investments have benefited from favorable borrowing conditions in the debt markets, which historically have been cyclical. The financing available to the funds from their banks, dealers and other counterparties is typically reduced during market disruptions. Market disruptions caused by unexpected political, military and terrorist events may from time to time cause dramatic losses for the funds and such events can result in otherwise historically low-risk strategies performing with unprecedented volatility and risk.
Permanent Establishment Risks. Avenue Capital Group generally intends to conduct the funds’
operations in a manner that will not cause them to have a “permanent establishment” in any country outside the United States, as such term is defined in the relevant income tax treaty. There can be no assurance that a particular country will not assert that a fund has a permanent establishment in such country, and if such assertion were upheld, it can potentially result in adverse tax consequences to the funds.
Availability of Suitable Investments. While we believe that many attractive investments of the type in
which the funds invest are currently available, there can be no assurance that such investments will continue to be available or that available investments will continue to meet the funds’ investment criteria. Furthermore, the funds may be unable to find a sufficient number of attractive investment opportunities to meet their investment objectives. Past performance is not necessarily indicative of future performance.
Competition. The markets for potential investments in the funds’ investment programs are highly
competitive. The funds will be competing for investment opportunities with a significant number of financial institutions and other private funds as well as various institutional investors. Some of these competitors are larger and have greater financial, human and other resources than the funds and may in certain circumstances have a competitive advantage over the funds. As a result of this competition, there may be fewer attractively priced investment opportunities than in the past, which could have an adverse impact on the ability of the funds to meet their investment goals or the length of time that is required for the funds to become fully invested. There can be no assurance that the returns on any fund’s investments will be commensurate with the risk of investment in the fund.
No Assurance of Investment Return. The funds’ task of identifying and evaluating investment
opportunities, managing such investments and realizing a significant return for investors is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a profit on such investments successfully. Avenue Capital Group believes that its investment strategy and investment approach moderate this risk through a careful selection of securities and other financial instruments. However, there is no assurance that the funds will be able to invest their capital on attractive terms or generate returns for their investors. Investors in the funds could experience losses on their investment, including a total loss of their investment. Risks Relating to the European Region
Economic and Political Risks. There is often a high degree of government regulation in European
economies, including in the securities markets. Action by such governments may directly affect foreign investment in securities in those countries and may also have a significant indirect effect on the market prices of securities and of the payment of dividends and interest. Changes in policy with regard to taxation, fiscal and monetary policies, repatriation of profits, and other economic regulations are possible, any of which could have an adverse effect on private investments. The European economies may differ favorably or unfavorably from the U.S. economy and other economies with regard to the rate of growth of gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments. Governments in certain of the countries in Europe participate to a significant degree, through ownership interests or regulation, in their respective economies. Action by these governments could have a significant adverse effect on market prices of securities and payment of dividends. Changing political environments, regulatory restrictions, and changes in government institutions and policies in Europe could adversely affect private investments. Civil unrest, ethnic conflict or regional hostilities may contribute to instability in some countries of Europe. Such instability may impede business activity and adversely affect the environment for foreign investments. Avenue Capital Group does not intend to obtain political risk insurance. Actions in the future of one or more European governments could have a significant effect on the various economies, which could affect market conditions, prices and yields of securities in the funds’ portfolios. Political and economic instability in any of the countries in Europe in which the funds invest could adversely affect the funds’ investments.
Legal Infrastructure. Laws affecting international investment and business continue to evolve, although
at times in an uncertain manner that may not coincide with local or accepted international practices. Laws and regulations, particularly those concerning foreign investment and taxation, can change quickly and unpredictably. Inconsistencies and discrepancies among the vast number of local, regional and national laws, the lack of judicial or legislative guidance on please register to get more info

This Item is not applicable to us. please register to get more info

Material Financial Industry Affiliations of Avenue Capital Group
Avenue U.S. currently has direct relationships with the following private funds:  Avenue Aviation Opportunities Fund, L.P.  Avenue Aviation Opportunities Fund II (Onshore), L.P.  Avenue Aviation Opportunities Fund II (Offshore Master), L.P.  Avenue Aviation Opportunities Fund II (Offshore), L.P.  Avenue COPPERS Opportunities Fund, L.P.  Avenue Credit Opportunities Fund, L.P.  Avenue Credit Opportunities Fund II, L.P.  Avenue Employee Participation Plan, LLC  Avenue Energy Opportunities Fund, L.P.  Avenue Energy Opportunities Fund II, L.P.  Avenue Gabriel Fund, L.P.  Avenue PPF Opportunities Fund, L.P.  Avenue Real Estate Fund, L.P.  Avenue Real Estate Fund (Parallel), L.P.  Avenue Real Estate Employee Participation Plan, LLC  Avenue Special Opportunities Fund I, L.P.  Avenue Special Opportunities Co-Investment Fund I, L.P.  Avenue Special Opportunities Fund II, L.P.  Avenue Strategic Opportunities Fund, L.P.  Avenue Special Situations Fund VI (A), L.P.  Avenue Special Situations Fund VI (B-Feeder), L.P.  Avenue Special Situations Fund VI (B), L.P.  Avenue Special Situations Fund VI (C-Feeder), L.P.  Avenue Special Situations Fund VI (C), L.P.  Avenue Special Situations Fund VI (Master), L.P.  Avenue Sustainable Solutions Fund, L.P.  Avenue Sustainable Solutions Fund SCSp  Falcon Energy Opportunities Fund, L.P.  MAGS Capital II, LLC  MAGS Capital IV, LLC Avenue U.S. serves as a sub-adviser to a third-party investment manager in respect of the Sub-Advised Public Fund. Avenue U.S. has relationships with the following entities (general partners or managing members (in accordance with the 2005 SEC Letter) of private funds that are advised by Avenue U.S.):  Avenue Aviation Opportunities Partners, LLC  Avenue Aviation Opportunities Partners II (Onshore), LLC  Avenue Aviation Opportunities Partners II (Offshore), LLC  Avenue Capital Partners VI, LLC  Avenue COPPERS Opportunities Fund GenPar, LLC  Avenue Credit Opportunities Partners, LLC  Avenue Credit Opportunities Partners II, LLC  Avenue Energy Opportunities Partners, LLC  Avenue Energy Opportunities Partners II, LLC  Avenue Gabriel GenPar, LLC  Avenue PPF Opportunities Fund GenPar, LLC  Avenue Real Estate GenPar, LLC  Avenue SO Capital Partners I, LLC  Avenue SO Capital Partners II, LLC  Avenue Strategic Opportunities Fund GenPar, LLC  Avenue Sustainable Solutions Partners GenPar, S.à r.l.  Avenue Sustainable Solutions Partners, LLC  Falcon Energy Opportunities Partners, LLC  GL Avenue Employee Management, LLC Avenue Europe currently has direct relationships with the following private funds:  Avenue-ASRS Europe Opportunities Fund, L.P.  Avenue Europe Capital Solutions Fund, L.P.  Avenue Europe Capital Solutions Feeder, L.P.  Avenue Europe Employee Participation Plan, LLC  Avenue Europe Opportunities Fund, L.P.  Avenue Europe Opportunities Fund, Ltd.  Avenue Europe Opportunities Intermediate Fund, L.P.  Avenue Europe Opportunities Master Fund, L.P.  Avenue Europe Private Opportunities Fund, L.P.  Avenue Europe Private Opportunities Co-Investment Fund, L.P.  Avenue Europe Select Opportunities Fund, L.P.  Avenue Europe Special Situations Fund II Continuation Vehicle (Euro), L.P.  Avenue Europe Special Situations Fund II Continuation Vehicle (U.S.), L.P.  Avenue Europe Special Situations Fund III (Euro), L.P.  Avenue Europe Special Situations Fund III (U.S.), L.P.  Avenue Europe Special Situations Fund IV (U.S.), L.P.  Avenue-SLP European Opportunities Fund, L.P.  Avenue Pantheon Broadway Fund, L.P. Avenue Europe may provide investment advice with respect to a portion of the assets of Avenue COPPERS Opportunities Fund, L.P. and Avenue PPF Opportunities Fund, L.P., either directly or indirectly, pursuant to global services agreements and/or sub-advisory agreements entered into with either or both Avenue U.S. Avenue Europe has relationships with the following entities (general partners or managing members (in accordance with the 2005 SEC Letter) of private funds that are advised by Avenue Europe and certain entities used to carry on Avenue Europe’s business):  Avenue-ASRS Europe Opportunities Fund GenPar, LLC  Avenue EPO Partners, LLC  Avenue Europe Capital Partners II, LLC  Avenue Europe Capital Partners III, LLC  Avenue Europe Capital Partners IV, LLC  Avenue Europe Capital Solutions Partners, LLC  Avenue Europe Opportunities Fund GenPar, LLC  Avenue Europe Select Opportunities Partners, LLC  Avenue Luxembourg S.A.R.L.  Avenue-SLP European Opportunities Fund GenPar, LLC  GL Avenue Employee Management, LLC  Avenue Broadway Partners, LLC In addition, Avenue Europe has relationships with the following entities (sub-advisers to private funds that are advised by Avenue Europe) that are Avenue Europe’s relying advisers:  Avenue Europe Management, LLP (authorized by the U.K. Financial Conduct Authority, formerly known as the U.K. Financial Services Authority, since 2004)  Avenue Iberia Asesores, S.L.  Avenue Italia Advisors S.r.l. Avenue Asia currently has direct relationships with the following private funds:  Avenue Asia Employee Participation Plan, LLC  Avenue Asia Special Situations Fund V, L.P. Avenue Asia and Avenue Europe may provide investment advice with respect to a portion of the assets of Avenue Gabriel Fund, L.P., either directly or indirectly, pursuant to global services agreements and/or sub-advisory agreements entered into with Avenue U.S. Avenue Asia has relationships with the following entities (general partners or managing members (in accordance with the 2005 SEC Letter) of private funds that are advised by Avenue Asia and certain entities used to carry on Avenue Asia’s business):  Avenue Asia Capital Partners V, LLC  GL Avenue Employee Management, LLC In addition, Avenue Asia has relationships with the following entities (sub-advisers to private funds that are advised by Avenue Asia) that are Avenue Asia’s relying advisers:  Avenue Asia Advisors Pvt Limited  Avenue Asia Singapore Pte Ltd.  Bo Yuan Jun He Consulting (Beijing) Co., Ltd.  IH Services HK Limited  GL Advisors Australia Pty. Ltd.  GL Advisors Hong Kong Limited (holding a Type 9 (asset management) license with the Securities and Futures Commission of Hong Kong since August 2015) In October 2006, Morgan Stanley became an indirect minority owner of Avenue. From time to time, certain funds may utilize Morgan Stanley for prime brokerage, consulting and other services. Avenue Capital Group is also affiliated with Amroc Investments, LLC. Marc Lasry and Sonia Gardner, the Senior Principals of Avenue Capital Group, own Amroc. As of January 1, 2008, all of Amroc’s employees became employees of Avenue Capital Group entities and there are no commissions or other fees paid to Amroc for sourcing investments. We do not believe that Avenue Capital Group’s relationship with Amroc is material to our ongoing business activities. Avenue U.S. is also affiliated with TLOA Servicing, LLC, a company formed for the purpose of supporting the tax lien investments of Avenue Strategic Opportunities Fund, L.P. Avenue Capital Group expects to work with local partners in certain jurisdictions, including through joint ventures. See Item 8 under the heading “Risks Related to Our Investment Strategies – Risks Associated with Real Estate Investments – Joint Venture Partners; Joint Venture Risks.” A number of entities with which Avenue Capital Group is affiliated serve as the general partners of private funds whose investment programs are managed by Avenue Capital Group and/or by affiliates of Avenue Capital Group.
Other Activities
Except as otherwise set forth in a fund’s offering documents, no Avenue Capital Group person is obligated to devote any specific amount of time to the affairs of the funds or managed accounts. Avenue Capital Group persons spend substantial time on other business activities, including those related to various existing and future pooled investment vehicles and other client accounts sponsored, formed, offered and managed by Avenue Capital Group and its affiliates. See Item 8 under the heading “Methods of Analysis, Investment Strategies and Risk of Loss – Risks Associated with Avenue Capital Group’s Investment Strategies - Other Activities.” Furthermore, the Senior Principals of Avenue Capital Group, and other officers and employees of Avenue Capital Group and its affiliates from time to time serve on the boards of directors, credit committees, or other committees, of one or more entities in which one or more of the Avenue funds or managed accounts has invested. In addition, certain Avenue Capital Group persons, or entities affiliated with such persons from time to time provide certain services to Avenue Capital Group, the funds, one or more of Avenue Capital Group’s other affiliates, and/or one or more of the investments or companies in which the funds invest. In particular, Mr. Furst is responsible for directing the investment activities of Avenue Europe’s funds, and dedicates his time predominantly to the leadership of Avenue Europe’s Distressed strategy; however, Mr. Furst also serves as Avenue Capital Group’s Chief Investment Officer and spends a portion of his time providing high-level investment oversight globally. As a result, there may be a number of conflicts of interest which may arise, which could adversely affect the funds and/or managed accounts of Avenue Capital Group. Please see the disclosure provided elsewhere in this brochure under Item 8 as well as in the offering documents of the applicable fund. Avenue Capital Group persons engage in a broad range of investment management activities, including sponsoring and managing other private funds and/or affiliated special purpose acquisition companies and other activities. Certain Avenue Capital Group persons also expect to sponsor and operate future pooled investment vehicles and other client accounts that pursue similar investment objectives or other lines of investment activity. Although the relationships and activities of Avenue Capital Group persons should enable these entities to offer attractive opportunities and services to the funds and investors, such relationships and activities, in the ordinary course of business, may also give rise to circumstances in which the interests of these entities and other affiliates of the Avenue Capital Group persons conflict with the interests of the funds and investors, including, by way of example but not limitation, competition with other investment vehicles (proprietary or third-party managed) in which investors may also have an interest, purchasing and investments in entities in which investors may have an interest, or taking or advocating positions in certain transactions that may be considered adverse to the interests of investors. The Avenue Capital Group persons, the funds, the general partners of such funds (if applicable) or their respective members, officers, directors, employees, principals or affiliates may come into possession of material, non-public information. The possession of such information may limit the ability of the funds to buy or sell a security or otherwise to participate in an investment opportunity. please register to get more info

Personal Trading
Code of Ethics; Personal Trading
We have adopted a written code of ethics that applies to Avenue Capital Group, our employees and certain related persons. Our code of ethics is administered by our Chief Compliance Officer or his designees. Employees are given training with respect to our code of ethics when they are hired and annually thereafter. Each client may obtain a copy of our code of ethics by submitting a written request to Andrew K. Schinder at 11 West 42nd Street, 9th Floor, New York, New York 10036 or by contacting Mr. Schinder at (212) 878-3500. The following general principles and standards of conduct are established by our code of ethics:  We must operate at the highest level of ethical standards in keeping with our fiduciary duties to clients, and in compliance with all applicable laws.  We have a duty to place the interests of clients first and to address and/or mitigate conflicts of interest.  Information about our operations and investment strategies, as well as information about investors in our funds or our managed account clients (other than, possibly, their name), unless otherwise consented to by the investor, is strictly confidential and will not be disclosed to anyone outside Avenue Capital Group and its consultants and agents, unless required by law or a government agency and upon prior notice to the Chief Compliance Officer.  Our employees may not use any confidential information or otherwise take inappropriate advantage of their position for the purpose of furthering any private interest or as a means of making any personal gain.  Our employees and their immediate families may not accept any benefit from a client, an investor in one or more of our funds or person who does business with us, except for normal business courtesies and non-cash gifts of nominal value, except as otherwise provided for by our code of ethics.  Insider trading is prohibited and may expose an employee to stringent penalties. Our code of ethics deals with a range of topics including, without limitation, the following:  Categories of persons related to Avenue Capital Group who are covered by the code of ethics.  Opening of personal securities accounts by covered persons.  Pre-approval requirement for most personal securities transactions.  Submission to Avenue Capital Group of information concerning personal securities holdings and transactions.  Restrictions on trading in securities of particular issuers.  Gifts, entertainment and investee company promotions (i.e., any discounted or complimentary goods or services provided by an investee company to a firm employee, such as hotel rooms).  Charitable contributions.  Political contributions and payments.  Reporting of violations and our whistle-blower policy.  How the code of ethics is administered.  How exceptions to the code of ethics may be granted by our Chief Compliance Officer. Each covered person is required to acknowledge that he or she has received and reviewed, and understands the Code of Ethics.
Participation or Interest in Client Transactions
We do not presently intend to engage in principal transactions, but we do have the right to engage in such transactions and may do so in the future. During the most recent fiscal year, Avenue Capital Group did not engage in principal transactions. Further, any fund that is deemed to hold “plan assets,” as defined under ERISA, is prohibited from entering into such transactions. A principal transaction occurs when an investment adviser, acting for its own account (or the account of an affiliate) buys a security from, or sells a security to, a client’s account, whereas an agency cross trade occurs when a person acts as an investment adviser in relation to a transaction in which such investment adviser, or any person controlling, controlled by, or under common control with such investment adviser, acts as broker for both such advisory client and for another person on the other side of the transaction. The funds have different procedures with respect to completing principal and agency cross transactions that are set forth in each fund’s operative documents. Accordingly, the portfolio managers are required to identify any potential principal transaction, and any potential agency cross trade between two or more funds, prior to effecting the transaction and to contact Avenue Capital Group’s Chief Compliance Officer. The Chief Compliance Officer, in consultation with outside counsel (if necessary), will determine whether or not the trade would constitute a principal transaction or an agency cross trade, and if so, whether such transaction is permissible and what procedures must be followed to complete the transaction. Avenue Capital Group has the right to cause the funds to engage in agency cross trades for reasons consistent with the investment and operating guidelines of the funds. These transactions, if effected, may or may not be subject to commissions. The funds may, from time to time, make an investment in a portfolio company in which one or more of Avenue Capital Group’s other clients invests in a different part of the capital structure. There may be instances where such a portfolio company may seek to take an action where the funds’ and the other clients’ interests in such portfolio company may conflict. Moreover, there may be situations in which a fund determines to invest in an issuer in which another fund managed by Avenue Capital Group or its affiliates maintains an investment. Furthermore, a private fund may invest in the interests of another fund managed by Avenue Capital Group and/or its affiliate(s). See Item 8 (“Methods of Analysis, Investment Strategies and Risk of Loss – Risks Associated with Avenue Capital Group’s Investment Strategies – Conflicts of Interest – Investments Involving Other Clients”). To the extent that the funds hold securities in a portfolio company with rights, preferences and privileges that are different than those held by other clients in the same portfolio company, Avenue Capital Group’s Principals and their representative affiliates may be presented with decisions when the interests of the funds and the other clients are in conflict. It is possible that a fund’s interests may be subordinated or otherwise adversely affected by virtue of the other clients’ involvement and actions relating to their investment. Avenue Capital Group has adopted procedures to address and, in some cases, mitigate the actual conflicts of interest that may arise. Exceptions to these procedures must be approved in advance by the Chief Compliance Officer. In some circumstances, where Avenue Real Estate Fund, L.P. and/or Avenue Real Estate Fund (Parallel), L.P. own a real estate asset outright or acts as the “operating partner” in a joint venture arrangement, employees of Avenue Capital Group or an affiliate may perform asset-level management functions of a type normally performed by an owner of real estate, including, among others:  asset and business plan level financial reporting functions;  supervision of service providers;  administration/negotiation of relationships with tenants;  negotiation with purchasers of for-sale residential units;  interaction with government agencies and civic bodies; and  design, planning and execution of tenant improvements and capital improvement projects. When Avenue U.S. provides these services, such real estate fund(s) may compensate Avenue U.S. or affiliates for the cost of performing them. In certain circumstances, Avenue Capital Group and its employees may receive discounted or complimentary goods or services provided from an investee company in which one or more funds invests. Avenue Capital Group’s compliance manual addresses such practices in its policy regarding gifts, entertainment and investee company promotions. Avenue Capital Group may, from time to time, recommend a security in which Avenue Capital Group, directly or indirectly, has an interest. For instance, it may be expected that one or more of the funds may invest capital in another of the funds or in securities of issuers in which one or more of the other funds hold positions. In addition, the general partners of certain of the funds have invested their own capital in their funds. Given the likely frequency of these occurrences, clients and investors in the funds will not be provided with notification of them. This may represent a conflict of interest for Avenue Capital Group. We will not be engaged as an investment adviser to advise investors as to the appropriateness of investing in the funds or managed accounts we manage. Although we will not receive any compensation for selling interests in the funds, we will receive compensation in our capacity as manager of these funds based in part upon the amount invested in the funds. See Item 14 (“Client Referrals and Other Compensation – Compensation for Client Referrals; Placement Agents for Funds”). Accounts that are beneficially owned by Avenue Capital Group’s employees, Principals and affiliates may from time to time transact in claims of distressed companies. These transactions will be subject to our personal account trading policy. please register to get more info

Selection of Brokers
In effecting securities transactions, Avenue Capital Group generally seeks to negotiate with brokers a combination of the most favorable commission and the best price obtainable on each transaction. Consequently, brokers are selected primarily on the basis of their execution capability and trading expertise consistent with the effective execution of the transaction. In determining the broker or dealer to be used or the reasonableness of a commission rate or spread, Avenue Capital Group may consider one or more of the following (in addition to the commission rate or spread):  the utility and reliability of brokerage services,  execution capability and performance,  financial condition,  investment information,  market insights,  access to analysts and management, and  idea generation. In determining the appropriate broker-dealer to execute a transaction, certain other non-execution related factors, such as access to research and other resources used in connection with a fund transaction, may also be included in the decision-making process. However, there is no express dollar amount attributable to non-execution benefits provided (i.e., neither Avenue Capital Group nor the funds “pay up” to execute orders), and there is no written or verbal agreement or other quid pro quo understanding to provide order flow in exchange for such non-execution related goods and services. As such, these are not soft dollar or commission sharing arrangements (see below). Accordingly, the commissions charged by brokers may be greater than the amount another broker might charge if Avenue Capital Group determines in good faith that the amount of these commissions is reasonable in relation to the value of the brokerage services and research information provided by the brokers. Avenue Capital Group’s authority to select the broker or dealer to be used may be limited by legal restrictions such as those imposed under the U.S. Employee Retirement Income Security Act of 1974 (ERISA). Consistent with the requirements of best execution, brokerage commissions may be directed to brokers in recognition of investment research and information furnished as well as for services rendered in the execution of orders by such brokers. By allocating transactions in this manner, Avenue Capital Group is able to supplement its research and analysis with the views and information of brokerage firms. The funds may also allocate a portion of their brokerage business to brokerage firms whose employees participate as brokers in the introduction of investors to the funds or who agree to bear the expense of capital introduction, marketing or related services by third parties. Avenue Capital Group effects securities transactions, to the extent permitted by law, with brokerage firms that may be affiliated with Avenue Capital Group or with investment companies registered under the Investment Company Act of 1940 to which Avenue U.S. provides advisory services, if it reasonably believes that the quality of execution and the commission are comparable to that available from other qualified firms (see Item 10 under the heading “Other Financial Industry Activities and Affiliations – Material Financial Industry Affiliations of Avenue Capital Group”). Certain broker-dealers, through which the Sub-Advised Public Fund may effect securities transactions, will be affiliated persons (as defined in the Investment Company Act) of Avenue Capital Group or the Sub-Advised Public Fund. Avenue Capital Group has adopted certain policies incorporating the standards of Rule 17e-1 issued by the SEC under the Investment Company Act which require that the commissions paid to affiliates of the Sub-Advised Public Fund be reasonable and fair compared to the commissions, fees or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities during a comparable period of time. The rule and procedures also contain review requirements and require Avenue Capital Group to furnish reports to the trustees of the Sub-Advised Public Fund and to maintain records in connection with these reviews.
Soft Dollar and Directed Brokerage Arrangements
We do not currently engage in soft dollar arrangements, but we reserve the right to do so in the future. Notwithstanding the foregoing, certain non-execution products and services may be provided by executing brokers, including, without limitation, research and other resources used in connection with executing a fund transaction. There is no expectation of order flow or any agreement to “pay up” for these products or services, however, and Avenue Capital Group does not believe that these constitute soft dollar items. To the extent that soft dollars are used, any products or services acquired using soft dollars will be consistent with Section 28(e) of the Securities Exchange Act of 1934. MiFID II creates new obligations for investment managers and may cause investment managers to pay for research on an unbundled basis. It is not clear that such a research payment would be treated as a “commission” for purposes of Section 28(e) of the Securities Exchange Act of 1934. See Item 8 “Methods of Analysis, Investment Strategies and Risk of Loss – Risks Associated with Avenue Capital Group’s Investment Strategies – Risks Relating to the European Region – MiFID II.” During the most recent fiscal year, Avenue Capital Group did not use any soft dollar items or engage in directed brokerage transactions.
Aggregation of Orders
If Avenue Capital Group has determined to purchase (or sell) an investment at the same time for more than one fund, Avenue Capital Group will generally place combined orders for all such funds simultaneously, and if all such orders are not filled at the same price, it will generally average the prices paid. Similarly, if an order on behalf of more than one fund cannot be fully executed under prevailing market conditions, Avenue Capital Group will allocate (or sell, as applicable) the investments among the different funds on a basis that it considers equitable. Situations may occur where the funds could be disadvantaged because of the investment activities conducted by Avenue Capital Group for other funds. From time to time, Avenue U.S., Avenue Europe, Avenue Asia or Avenue Credit may enter trades for funds managed by one of their affiliated investment advisers and such affiliates may enter trades for funds managed by Avenue U.S., Avenue Europe, Avenue Asia or Avenue Credit.
Allocation Procedures
In addition to our responsibilities with respect to the management and investment activities of the funds and any managed accounts, we and our affiliates will have similar responsibilities with respect to various other existing pooled investment vehicles and managed accounts (such clients, together with clients of Avenue Capital Group, are referred to as “Avenue Capital Group clients”). The existence of such multiple vehicles and accounts necessarily creates a number of potential conflicts of interest. We expect that investments will be allocated between and among Avenue Capital Group clients, particularly where the investment objectives and policies of the Avenue Capital Group clients overlap (in whole or in part). There are, or are expected to be, differences between and among the Avenue Capital Group clients, which may affect how a transaction is allocated with respect to, among other considerations:  investment objectives,  investment strategies,  investment parameters and restrictions,  portfolio management personnel,  tax considerations,  liquidity considerations of the investment as well as the funds,  hedging considerations,  legal and/or regulatory considerations,  potential volatility of the investment,  asset levels,  fee levels,  timing and size of investor capital contributions and redemptions,  cash flow considerations,  market conditions,  existing exposures to an investee company’s securities or other instruments, and  other criteria we deem relevant (the nature and extent of the differences will vary from client to client). In addition, certain investments may be purchased in odd lots, or there may exist stub amounts, either of which are not readily allocable to multiple clients. Notwithstanding the differences between and among Avenue Capital Group clients, and the possible existence of hard to allocate investments, there may be circumstances where some or all of the Avenue Capital Group clients participate in an aggregated order where we believe it is in the best interest of all Avenue Capital Group clients participating in such order. In all such instances, we will assess whether the investment should be allocated on a pro rata basis, targeted asset value basis or other basis. Avenue Capital Group will not always allocate aggregated orders among Avenue Capital Group clients on a pro rata basis. There will be circumstances where:  only some of the Avenue Capital Group clients participate in the aggregated order;  the level of participation between and among the Avenue Capital Group clients in the aggregated order is not on a pro rata basis; and/or  investment transactions between and among the Avenue Capital Group clients vary in other respects. Such non-pro rata allocations of aggregated orders between and among the Avenue Capital Group clients will be made in the discretion of Avenue Capital Group when deemed:  appropriate given the differences between the clients involved,  appropriate because the target holdings of the particular investment that Avenue Capital Group has established with respect to the clients involved differ from client to client, and/or  otherwise to be in the best interests of the clients involved. From time to time we may review Avenue Capital Group clients’ exposure to certain investments and determine exposure asset value targets for clients. Where the exposure targets are used prior to entering a transaction, Avenue Capital Group may prepare a report that sets forth (i) the target exposures, on an asset value basis, for certain clients with respect to specific investments and (ii) a consistent methodology for the allocation of transactions in these investments among these clients. After that, until the applicable asset value exposure targets are achieved or modified, purchases or sales, as applicable, in the relevant investments (which will generally be made on an aggregated basis) will be allocated to Avenue Capital Group clients in the amounts (expressed as a percentage of the aggregate amount purchased or sold) determined pursuant to the report rather than on a pro rata basis. It is our general policy that no Avenue Capital Group client will receive inappropriate preferential treatment or otherwise be treated unfairly; and we will seek to uphold this policy when making decisions regarding investment allocations. In connection with certain funds’ investment programs, the funds (along with other Avenue Capital Group clients) have made and will make investments through special purpose entities domiciled in Luxembourg. The private funds’ offering documents provide that the funds shall bear all investment expenses. Each fund shall bear its allocable share of special purpose entity expenses associated with employees’ salaries and office space rent in Luxembourg in accordance with Avenue Capital Group’s expense allocation policy. The Sub-Advised Public Fund may invest in securities that are similar to investments that may be held by private funds managed by Avenue Capital Group and its affiliates. Where a particular investment would be eligible for investment both by the Sub-Advised Public Fund and a private fund managed by Avenue Capital Group and/or its affiliates, prior to purchasing such investment, Avenue Capital Group and its affiliates will prepare a report that sets forth the target exposures, on an asset value basis, for the applicable public and private funds with respect to the identified investments (as determined for each fund by such fund’s portfolio manager). Thereafter, until the applicable asset value exposure targets are achieved or modified, purchases or sales, as applicable, in the relevant investments (which will generally be made on an aggregated basis) will be allocated to the applicable public and/or private funds in the amounts (expressed as a percentage of the aggregate amount purchased or sold) proportionate to each fund’s applicable asset value exposure target. When the Sub-Advised Public Fund and a private fund participate in an aggregated trade on an investment with an asset value target, to the extent such investments are allocated non pro-rata, such allocations must be approved, in advance, by the Chief Compliance Officer. Currently, the Performing Loans strategy has two funds and is walled off from the rest of Avenue Capital Group’s strategies. As such, the strategy will source and invest separately and will not aggregate orders with other strategies. The allocations between the two Performing Loans funds are made on an available cash or targeted net asset value basis, and the Performing Loans strategy maintains similar books and records as Avenue Capital Group’s other strategies.
Trade Errors and Net Asset Value Computation Errors
We have adopted a policy for the purpose of addressing trade errors that may arise, from time to time, with respect to the securities transactions of the private funds and any managed accounts. An example of a trade error is the sale of a security when it should have been purchased. Pursuant to the policy, we will seek to identify and correct any trade errors in an expeditious manner. Trade errors that result in losses for a private fund or managed account that are the result of our gross negligence or willful misconduct, as determined by us, will be reversed, and we will be responsible to make the affected funds and managed accounts whole. Trade errors that result in losses for a private fund or managed account that are not the result of our gross negligence or willful misconduct, as determined by us, will be reversed and we may, but are not required to, bear such losses in whole or in part. Any such losses we do not bear will be borne by the affected funds and/or managed accounts. Trade errors that result in losses for a public fund or any fund that is deemed to hold “plan assets,” as defined under ERISA, whether or not they are the result of our gross negligence or willful misconduct, will be reversed, and we will be responsible to make the affected public fund whole. Gains from trade errors will be credited to the affected funds or managed accounts. Gains from trade errors may not be used to offset losses from trade errors. “Soft dollars” or “client commissions” will not be used, either directly or indirectly, to correct trade errors. We document each trade error and maintain a trade error file. The determination of whether or not a trade error has occurred will be in our sole discretion. please register to get more info

Each fund and managed account is maintained, supervised and reviewed on a regular basis by its respective investment principles. Matters reviewed include specific investments held, the percentage of assets in various types of asset classes and the relative and absolute performance of each account. The investment principles for each Avenue Capital Group fund are listed in that fund’s confidential offering memorandum. With respect to the private funds for which Avenue Capital Group serves as the investment manager, each investor receives annual audited financial statements of each such fund. In addition, investors in the various private funds receive additional financial statements and reports as described in the confidential offering memorandum for each private fund. Investors in the Sub-Advised Public Fund should receive periodic reports from the third-party investment manager that Avenue U.S. sub-advises. With respect to other clients for whom we may serve as the investment manager on a managed account or sub-advisory basis, we will provide such clients with reports and statements, the content and frequency of which will be as agreed. please register to get more info

Compensation for Client Referrals; Placement Agents and Distributors for Funds
Avenue Capital Group may retain the services of one or more placement agents and distributors in connection with the solicitation of prospective investors. Avenue U.S. has retained Merrill Lynch Alternative Investments, LLC, Spoonhill Asset Management, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co., Credit Suisse Securities (USA) LLC, Magenta Capital Services, Ltd., Citigroup Global Markets Limited, UBS Financial Services Inc., Morgan Stanley Smith Barney, Inte Securities LLC, FallLine Securities, LLC and/or Andes Capital Group,. LLC (and, in certain cases, one or more affiliates of these entities) as placement agents for certain private funds. Avenue Europe has retained Morgan Stanley & Co., Credit Suisse Securities (USA) LLC, Barclays Capital Inc., UBS Financial Services Inc., Magenta Capital Services, Ltd., Picton S.A., Citigroup Global Markets Limited, J.P. Morgan Securities LLC, Andes Capital Group, LLC, Bradley Woods & Co. Ltd. and, in certain cases, one or more affiliates of these entities, as placement agents. Avenue Asia has retained Probitas Funds Group, LLC as a placement agent for certain funds. Avenue Credit may in the future retain the services of one or more placement agents in connection with the solicitation of prospective investors. Avenue Credit does not presently retain any third-party placement agents. Typically, placement agents and distributors retained by Avenue Capital Group are paid a fee based upon a percentage of the investor's investment or of Avenue Capital Group’s management fee. These fees are borne by the particular firm. If an investor that is placed with Avenue Capital Group by one of the placement agents or distributors we have retained has a brokerage or other relationship with that placement agent or distributor, that investor may pay additional fees to the placement agent or distributor if the terms of its relationship with the placement agent or distributor so provide. To the extent applicable, solicitations by third party placement agents of prospective managed clients and funds not sponsored by Avenue Capital Group are made in accordance with SEC Rule 206(4)-3 adopted under the Advisers Act. please register to get more info

We have custody, as defined in Rule 206(4)-2 under the Advisers Act, of the assets of certain of the private funds as a result of the service of certain of our affiliates as general partners of some of the private funds we manage and our ability to remove the independent directors of some of the private funds we manage. The private funds are audited annually and deliver audited financial statements to their investors within 120 days’ of the applicable fiscal year-end. Avenue U.S. does not have custody of the Sub- Advised Public Fund’s assets. please register to get more info

Item 4 includes a description of the investment discretion that we exercise. please register to get more info

We have policies and procedures in place for the voting of proxies, processing of corporate actions and participating in class action lawsuits and related settlements on behalf of the funds and managed accounts we advise. The proxy policy is designed to ensure compliance with the proxy voting, disclosure and record keeping requirements under SEC Rules 206(4)-6 and 204-2 adopted under the Advisers Act. Our policies and procedures are also designed to ensure that all proxy and corporate action proposals are thoroughly reviewed and voted in the best interest of each fund, provide disclosure to fund investors and ensure that certain documentation is retained. As a general matter, clients may not direct our vote in a particular solicitation. Avenue Capital Group’s objective is to ensure that its proxy voting and corporate action activities on behalf of the funds are conducted in a manner consistent, under all circumstances, with the best interest of the funds.
Proxy Voting
With respect to certain proxy proposal issues, we vote in accordance with predetermined “for” or “against” designations, except when we determine the best interests of the client require a contrary vote. We vote other proxy proposals on a “case by case” analysis in the best interests of the client. In the event that Avenue Capital Group votes contrary to the proxy voting guidelines, we will document the basis for our contrary voting decision. In addition, Avenue Capital Group may choose not to vote proxies in certain situations or for certain funds, such as (i) where a fund has informed Avenue Capital Group that it wishes to retain the right to vote the proxy, (ii) where Avenue Capital Group deems the cost of voting would exceed any anticipated benefit to the fund, (iii) where the proxy is received for a fund that has been terminated, or (iv) where a proxy is received by Avenue Capital Group for a security it no longer manages on behalf of a fund. Avenue Capital Group will document the basis for the decision not to vote. We may be subject to conflicts of interest in the voting of proxies. If at any time Avenue Capital Group becomes aware of an actual conflict of interest relating to a particular proxy proposal, Avenue Capital Group will handle the proposal as follows:  If the proposal is designated in the proxy voting policies as “For” or “Against,” the proposal will be voted by Avenue Capital Group in accordance with the proxy voting policies; or  If the proposal is designated in the proxy voting policies above as “Case by Case” (or not addressed in the proxy voting policies), if it is clear how to vote in the best interest of the funds entitled to vote then the vote may proceed, otherwise, Avenue’s Conflicts Committee will attempt to resolve the conflict of interest and will seek to resolve the conflict pursuant to the procedures set forth in “Conflict Resolution in Proxy Voting and Corporate Actions” below. Each investor in a private fund and each managed account client may obtain information on how we voted with respect to the securities of such fund or managed account, as applicable, and obtain a copy of proxy voting policies and procedures by submitting a written request to Andrew K. Schinder at 11 West 42nd Street, 9th Floor, New York, New York 10036 or by contacting Mr. Schinder at 212-878-3500. With respect to any public fund, Avenue U.S. shall in due course provide information to the public fund regarding how the public fund’s proxies and corporate actions were voted to enable the public fund to make the required disclosures regarding the proxy voting.
Corporate Actions
Avenue Capital Group has adopted procedures to address and, in some cases, mitigate the conflicts of interest that may arise with respect to corporate actions and proxy voting where multiple funds hold different securities of the same issuer. In cases where either a specific right, such as a vote with respect to a security or the grant of a waiver, or an ongoing right, such as an opportunity to serve on a creditor’s committee or otherwise engage in discussions with an issuer, arises, and Avenue Capital Group does not identify a conflict of interest, the following procedures will apply:  Avenue Capital Group will be responsible for determining whether the course of action that is in the best interest of the relevant fund is clear;  Avenue Capital Group will exercise the right or ongoing right in the best interest of the relevant fund(s); and  The Chief Compliance Officer will be notified prior to the exercise of the right.
Conflict Resolution in Proxy Voting and Corporate Actions
If Avenue Capital Group identifies a conflict of interest with respect to corporate actions and proxy voting where multiple funds hold different securities of the same issuer, then Avenue Capital Group will notify the Chief Compliance Officer and convene its Conflicts Committee to attempt to resolve the conflict. If the Conflicts Committee cannot do so, Avenue Capital Group will follow the procedures set forth in each fund’s organizational documents. The funds’ organizational documents generally provide that:  In the case of a public fund, the Board of Directors (or Trustees) of the public fund may direct the vote on behalf of the fund; and  In the case of a private fund, an independent committee established by the fund or independent representative appointed to handle such matters or, if permitted under the fund’s organizational documents, an independent third-party, may vote on behalf of the fund.
Class Actions
Avenue Capital Group has adopted a policy with respect to the participation of its clients in class action lawsuits and related settlements. Avenue Capital Group employs a third party that provides a list of outstanding class actions. Avenue Capital Group’s Compliance Department, along with the applicable Senior Portfolio Manager, review an internal report showing all Avenue investments for which Avenue Capital Group clients may participate in a class action in order to determine whether participation in the class action is in the best interest of the Avenue Capital Group clients. Avenue Capital Group may determine that it may not be in Avenue Capital Group clients’ best interest to participate in a class action if, among other reasons:  The Avenue Capital Group clients have appointed a person to an interested party’s Board of Directors;  The Avenue Capital Group clients are negotiating or may seek to negotiate a transaction with an interested party; or  The level of resources that would need to be allocated to the class action effort is disproportionate to the perceived potential benefit to the Avenue Capital Group clients. In the event of a conflict of interest between or among Avenue Capital Group clients in connection with a class action matter, Avenue Capital Group (and its affiliates, if applicable) will analyze the interests of the pertinent Avenue Capital Group clients in order to determine the appropriate course of action (e.g., allowing the class action to proceed with respect to similarly situated Avenue Capital Group clients and/or declining to participate in a class action on behalf of other similarly situated Avenue Capital Group clients). please register to get more info

We have included herewith a balance sheet for Avenue U.S.’s most recent fiscal year. Avenue Asia, Avenue Europe and Avenue Credit do not require or solicit prepayment of more than $1,200 in fees from the funds, six months or more in advance, and therefore are not required to include a balance sheet for their most recent fiscal year. please register to get more info