NEW YORK (Bloomberg) - Deutsche Bank AG, Germany's biggest bank, has been trying to collect $107 million loaned to bankrupt units of the SageCrest LLC hedge fund, according to court documents.

SageCrest Holdings Ltd., a Bermuda-based unit that filed for bankruptcy protection on August 20, said it had about $100 million outstanding under a credit facility with Deutsche Bank. SageCrest II LLC, a Greenwich, Connecticut-based fund, sought bankruptcy protection August 17 after the bank told it to sell assets at a discount to pay a $7 million loan, said the fund's lawyer, Bill Brewer of Bickel & Brewer.

Deutsche Bank told SageCrest management that it "simply wanted the debtors to liquidate their assets as quickly as possible to pay all amounts outstanding on the credit facilities", the hedge fund said in papers filed on August 22 in US Bankruptcy Court in Bridgeport, Connecticut.

SageCrest specialises in making secured loans to smaller companies in financial, life-insurance and mortgage businesses that cannot get money from "traditional sources", according to court documents. The hedge fund blamed its setbacks on tightening credit markets that hurt its loan portfolio and made it harder to sell loans and other assets to pay debt.

SageCrest said it has paid $133 million of the $240 million it owed to Deutsche Bank nine or 10 months ago because it was unable to refinance the loans.

On about August 4, Deutsche Bank declined to lend the fund $2 million, SageCrest said. That precipitated the SageCrest's 11 filing on a Sunday, which the Bermuda-based affiliate followed three days later, Mr. Brewer said in a phone interview.

Deutsche Bank, which had extended a $400 million credit facility to SageCrest, "had been pressuring all SageCrest entities" even though the loans were well secured by the assets of SageCrest's units, Mr. Brewer said,

"They basically said, "We're pulling the plug," Mr. Brewer said.

"As lenders like Deutsche Bank attempt to deal with their exposure to structured products, sub-prime-mortgage defaults, and an overall volatile market, willingness to lend has been significantly reduced," SageCrest said in court documents.

Ted Meyer, a Deutsche Bank spokesman in New York, declined to comment.

The hedge fund and its manager, Windmill Management LLC, run by Alan and Philip Milton, were sued at least twice by clients in the past year.

In January, SageCrest settled a legal fight with Art Capital Group after suing it and being countersued for breaching a credit agreement. Art Capital, a specialty lender, was once the largest creditor of bankrupt Berry-Hill Galleries Inc.

Windmill was sued in May by one of its investors, Wood Creek Capital Management, for failing to repay an investment.

SageCrest II stopped investors from redeeming their money and has been liquidating assets for several months "in an orderly manner", Mr. Brewer said.

SageCrest II's Chapter 11 petition listed debt of less than $10 million.

SageCrest Holdings said in its filings that it has assets and debt of $100 million to $500 million each.