The embattled hedge fund Absolute Capital Management was hit by fresh legal woes today as it emerged that a shareholder had been trying to force two of its funds into wind-up and call in the liquidators.

AbCap told investors that John Bruhl had filed a petition in a Cayman Islands court to have its European Catalyst and Octane funds wound up.

Mr Bruhl proposed that Krys & Associates, with a base on the Islands, become provisional liquidators.

Mr Bruhl is a shareholder in both funds.

AbCap said it had managed to have the claim adjourned until the end of the month, but only after several big shareholders intervened to state their support.

It had also promised not to tinker with shareholders' rights without first gaining their approval.

The battle for the two funds threatened to overshadow the "good progress" AbCap said it was making in talks with shareholders aimed at restructuring its funds.

The setback comes as AbCap braces itself for a string of law suits from angry investors, who lost money following the shock departure of its famed fund manager Florian Homm last month.

Last week a band of shareholders retained Simmons & Simmons as a legal adviser for their claims.

AbCap threatened to go into freefall in the wake of Mr Homm's departure. Its share price collapsed and investors rushed to pulled swathes of its $2.5 billion of funds.

The situation grew more dire as it emerged that many of Mr Homm's investments were in highly illiquid American companies known as 'Pink Sheet' stocks. A big withdrawal of funds by investors could have forced a fire sale of AbCap investments.

But Jonathan Treacher, the chief executive, proposed a rescue restructuring aimed at hiving off the illiquid holdings into a "corner pocket" vehicle. Mr Treacher urged shareholders to support the proposal.

Today, AbCap said it had held informal talks with investors holding about 70 per cent of the shares in the funds it intended to restructure. It said "substantially all" of those investors had agreed to support the plan.

The firm said it now expected to call shareholder meetings for the Absolute Return Europe and East West fund in order to secure investor approval.

Forcing the adjournment of Mr Bruhl's wind-up plans will give shareholders time to vote on the proposals, AbCap said.

Its shares, which tumbled more than 70 per cent in the days after Mr Homm left, picked up 2.5p to 77.5p.

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