About as funny as anything gets these days.

You can’t have your money back, but you can have the crap we bought with it:

GoldenTree Asset Management, a credit hedge fund, is offering investors who want to withdraw money securities instead of cash, triggering protests from those who in many cases lack means to dispose of such instruments.

Hedge funds such as GoldenTree warn investors in offering documents that they have the right to pay investors back “in kind” not cash. Such payments in kind, however, have been highly unusual until the current credit crisis, which has led hedge funds to place a variety of restrictions on investors trying to withdraw their money.

GoldenTree, which specialises in investing in complex debt ins-truments, had about $10bn (€7.6bn) under management last year. But losses and redemptions could leave it with half as much if investors made good on withdrawal requests, said a person with direct knowledge of the matter. GoldenTree declined to comment.

In a letter to investors last month, GoldenTree said “withdrawing partners that do not elect to revoke their withdrawal request will receive their proceeds primarily in kind. It is unlikely that any cash will be distributed.”

This could be a problem for endowments that have little or no capability to hedge, trade or sell illiquid debt instruments. The GoldenTree letter said: “We can provide no assurances that these assets will be saleable and will no longer provide any management oversight or advice regarding such assets.”

Some investors in GoldenTree and other credit hedge funds see payments in kind as an unfair tactic designed to keep them from making withdrawals.

[more] via FT.com / Companies / Financials – GoldenTree fund invokes clause to pay investors in kind not cash.