By Andrew Acurria


Venture capital funds founded by Brian Koo, a scion of South Korea's LG Group family, filed for bankruptcy protection to liquidate assets and protect itself from creditor litigation.

Sunday's chapter 11 filing in the U.S. Bankruptcy Court in San Jose covers two funds tied to Mr. Koo's Formation Group that invested $250 million in investors' money by 2016.

Litigation and arbitration proceedings initiated by Korea's Yesco Holdings Co. Ltd. forced the funds into bankruptcy, according to their court papers. "In response to both Yesco's threats and the now pending arbitration proceeding, certain limited partners of the funds have become concerned about their investments," court papers said.

Yesco, an affiliate of an LG spinoff, has claimed it is owed $53 million as a secured creditor, which the funds dispute. The bankruptcy is expected to serve as a forum to litigate the validity of those claims and monetize the funds remaining investments.

Formation Group was formed in 2015 when Mr. Koo parted ways with venture capitalist Joe Lonsdale.


Write to Andrew Scurria at andrew.scurria@wsj.com


(END) Dow Jones Newswires

04-11-22 1812ET