Daniel Zwirn is facing tough times. His firm, D.B. Zwirn & Co, is being eyed by a number of bidders as it tries to recover from a financial scandal.

Daniel Zwirn is facing tough times. His firm, D.B. Zwirn & Co, is being eyed by a number of bidders as it tries to recover from a financial scandal. The young hedge fund manager, who announced the closure of his two largest funds last year, seems to have little choice but to sell a significant chunk of his firm.

Fortress Investment Group and Blackstone Group's GSO Capital Partners hedge fund are reported to be among the bidders for D.B. Zwirn's portfolio of some USD2.5bn, which includes complex business loans and other assets.

Irish billionaire investor Dermot Desmond's private equity firm International Investment & Underwriting is also reported to be teaming up with Asian backers in a bid to take over the Zwirn funds and use it as a platform for investment in distressed assets, with Daniel Zwirn remaining involved in management.

At its height D.B. Zwirn was attracting more than USD100m a month in new capital from investors and managed as much as USD5bn, but last year the firm admitted that its former chief financial officer had improperly transferred client money between different funds as well as billing investors for the use of a Gulfstream jet.

Early last year the firm decided to close its Special Opportunities fund and a sister offshore vehicle after investors asked to withdraw USD2bn. D.B. Zwirn found itself a forced seller of loans into a distressed market.

Daniel Zwirn, who is still only 37, may have been unlucky in that the accounting problems coincided with the onset of the credit crunch. But he remains determined to restore his fortunes in a business he says he 'loves very much'.