The Basis Yield Alpha Fund (Master) failed to meet margin calls and creditors are now closing in and attempting to seize its assets, according to a report in the Financial Times (FT).
It is also claimed that the lenders have enlisted accountants Grant Thornton to act as restructuring advisors.
The FT report follows falls in June for two funds which are heavily invested in high-risk debt products, after which the Sydney-based fund manager put a limit on withdrawals.
Basis Capital's managing director Stuart Fowler said: "The current situation in structured credit markets is currently extremely uncertain which has resulted in difficulty valuing the underlying investments of the funds. For that reason, we have decided to suspend applications and redemptions."
Statistics showed that the Basis Yield Alpha Fund fell nine per cent, while the Basis Pac-Rim Opportunity Fund fell by nine per cent.