A Bermuda-based hedge fund that buys emerging-market debt is being liquidated after lenders withdrew credit, according to sources cited by Bloomberg.

Michael Morrison and Charles Thresh, of KPMG, were appointed as provisional liquidators of the Millennium Global Emerging Credit Fund Ltd. by the Bermuda Supreme Court last week.

And the entity, which had assets worth $818 million on August 29 according to Bloomberg data, has been removed from the Bermuda Monetary Authority's list of licensed investment funds.

The fund was founded by Millennium Global Investments Ltd., the London-based money manager founded by former Goldman Sachs Group Inc. executive Michael Huttman.

The firm started selling assets off last week, said one of the unnamed sources cited by Bloomberg, who asked not to be identified because the information is private. Tim Draper, a spokesman for Millennium, declined to comment.

The news comes as Bermuda prepares to host the Global Hedge Fund Summit at the Fairmont Southampton hotel next week. Many hedge funds have been liquidating their equity holdings during the turmoil in world markets in recent weeks.

"We're going to see a lot more liquidations," said K. Daniel Libby, a manager at Greenwich, Connecticut-based Sands Brothers Asset Management LLC, which invests in hedge funds. "Hedge funds that don't have high amounts of cash on hand are going to be most at risk."

Hedge funds focusing on emerging markets have lost 22 percent on average this year, according to data compiled by Hedge Fund Research Inc. Emerging-markets stocks and bonds have fallen, led by China, Russia and Brazil, as commodity prices plunged and investors shunned riskier assets on concern the global economy is entering a recession. The MSCI Emerging Markets Index has plunged 53 percent this year.

Millennium, which manages $15 billion, was founded in 1994 by Huttman, who had started Goldman Sachs' asset-management business in London during his four years at the firm. Prior to Goldman, Huttman spent seven years at JPMorgan Chase & Co., where he managed global fixed-income portfolios.

Apax Partners Worldwide LLP co-founder Ronald Cohen bought a stake in Millennium in July, joining Lord Jacob Rothschild who has been on the firm's advisory board since it was founded.

Millennium's emerging markets credit fund had earned 25 percent annually since it was started in November 2006, according to Bloomberg data, as of August 29.

The fund was run by Michael Balboa, who had worked at London-based hedge fund Rainbow Advisory Services Ltd. from 2003 to 2006. Earlier, he worked at Greenwich Europe Ltd. as a manager of emerging markets sales and trading. Balboa previously worked at Strategos Fund Ltd., and was an emerging-markets bond analyst at Salomon Brothers Inc.

Hedge funds are suffering amid the turmoil in global financial markets that started with the meltdown in US sub-prime mortgages. An estimated 700 funds may go out of business by the end of the year, an increase of 24 percent from 2007, according to Hedge Fund Research.

Highland Capital Management LP, based in Dallas, last week shut its flagship Highland Crusader Fund and another fund. Barclays Capital seized $642 million of leveraged loans from Highland.