The hedge fund was hit extremely hard by falling natural gas prices, losing $6 billion after betting on futures.
Fortress Investment Group has been brought in to help with the liquidation of the remaining assets, required to pay back the hedge fund's supporters.
Amaranth's bet on natural gas prices saw the company hit as the price of futures dropped two thirds since a peak at the end of last year.
Analysts believe that Amaranth's tactics â which had seen the fund make great gains as prices rose sharply last year â were exceptionally risky, based as they were on long money and with minimal hedging.
The Economist reports further that the hedge fund's losses have extended beyond its private investors, with the pension fund at 3M and funds based in hedge funds at Goldman Sachs and MAN Group all being hit.
There are concerns that growing pension fund deficits are prompting trustees to invest in riskier areas, leaving open the opportunity of catastrophic losses when the risks the employee's money are exposed to turn sour.