Tilton cries SOS

Street ‘Diva’s’ funds file for Chap. 11

Lynn Tilton — the selfproclaimed “Diva of Distressed” — just cried for the help of a bankruptcy judge.

The flamboyant financier — who gained notoriety for her racy outfits, as well as for her penchant for sending steamy Christmas cards to clients — said Monday that the Zohar funds she once managed have filed for Chapter 11 protection.

It’s quite the turnaround for the 58-year-old Wall Street pro, who in late 2017 appeared to gain the upper hand in an epic legal battle with bond insurer MBIA and the funds’ investors.

Tilton, who runs New York buyout firm Patriarch Partners, stepped down as manager of the three funds in 2016 amid the litigation. The Zohar funds, now managed by Alvarez & Marsal, control $2.5 billion in loans to distressed companies.

“It has become increasingly clear that value cannot be maximized in the litigious and charged atmosphere that currently exists,” Tilton, who is known as much for her flashy outfits as her turnaround prowess, said in a statement Monday.

The filing is expected to halt most of the legal proceedings and allow Tilton to work toward selling assets.

Among the companies in Patriarch’s portfolio are MD Helicopters, Stila Cosmetics and Spiegel.

Late last year, Tilton scored two significant legal wins. In December, a New York federal judge threw out a civil racketeering case filed by Alvarez & Marsal, which alleged that the distressed diva defrauded it out of $1 billion.

The judge’s decision came three months after Tilton was cleared of fraud allegations by the Securities and Exchange Commission, which claimed in 2015 she had bilked investors out of $200 million.

Monday’s filing was not the first time the Zohar funds sought Chapter 11 protection.

In November 2015 — while battling with MBIA — the Zohar funds filed for bankruptcy protection, but following pushback from MBIA, Tilton ultimately stepped down from the funds.