Invictus managers withhold $10M, trigger ERISA asset showdown

Invictus fund managers are facing scrutiny after allegedly holding back $10 million in assets, sparking an ERISA fight with big lessons for wealth firms. 

On June 30, 2025, the Delaware Court of Chancery granted an application for interlocutory appeal in a dispute between Invictus Special Situations Master I, L.P., a Cayman Islands exempted limited partnership with ERISA investors, and its former managers. The case began when the fund removed its management company, Invictus Global Management, LLC, and its general partner, Invictus Special Situations I GP, LLC. Both firms were owned and controlled by Cindy Chen Delano and Amit Patel. The fund alleged that, after removal, the former managers improperly retained approximately $10 million in fund assets, as well as large amounts of fund information. 

The fund sued in late 2023, seeking breach of contract damages and injunctive and declaratory relief. The defendants countered by claiming that the fund’s partnership and management agreements entitled them to advancement of legal expenses from the fund’s assets. This argument became the heart of the legal battle: whether ERISA allows fiduciaries to use plan assets to pay for their legal defense. 

The Chancery Court ultimately ruled in favor of the fund, determining that ERISA prohibits fiduciaries from using plan assets to advance legal costs in this situation. The court relied on Third Circuit precedent, particularly the interpretation of ERISA Section 1110, and concluded the provisions in the agreements allowing for advancement were void. The court noted that ERISA is designed to protect plan beneficiaries by preventing fiduciaries from using plan assets for their personal benefit outside their proper duties. 

The court’s June 30 order certified the advancement ruling for interlocutory appeal to the Delaware Supreme Court. The decision came after months of litigation over jurisdiction and the applicability of ERISA to the parties’ claims and defenses. 

For wealth management firms, the case underscores the risks of assuming that contractual protections will stand up when ERISA assets are involved. It’s a reminder that managing plan assets comes with strict compliance obligations, and that ERISA can override agreements that might seem protective on paper. The Invictus dispute offers a clear takeaway: when handling ERISA assets, firms need to be certain their practices align with federal law, or they could find themselves in costly legal battles.