An agreement has been reached in principle for a rescue package to save a crisis-hit investment fund.

But some investors fear the proposed deal would be a disaster for shareholders and a complete capitulation to the demands of its main lender.

Quadris Environmental Forestry Fund PCC plc, which has a registered office on Athol Street, Douglas, was launched in 2001 and has more than £100m invested in the teak plantations of Floresteca in Brazil.

But it was left fighting for survival after US hedge fund Crestline declared the fund was in default of its loan and called in the receiver.

With Quadris’s assets frozen, some investors fear they will lose all or a significant part of their money.

But following a meeting with Crestline at its offices in Fort Worth, Texas, Quadris’s Financial Services Authority-appointed controller has written to investors with a proposal to save the fund.

Gordon Wilson told them that agreement had been reached in principle on a way forward but which would involve compromises.

Under the plan, Crestline’s debts will be rest to $41.2m as of June 1 this year in order to cure the claimed defaults.

Certain loan covenants will be relaxed and an independent valuation of the underlying assets will be carried out, and which will take 10 to 12 weeks to complete.

If the measures are approved and successfully completed, Mr Wilson says the receiver and controller will stand down and a new board will be constituted.

He told investors he would send them more details at the end of August or early September.

’In the meantime, compared to all other alternatives in current circumstances, we believe this arrangement is by far and away in the best interests of the fund and all of its stakeholders,’ he said.

But Stephen Metcalf, who is a Warsaw-based partner at Synergi Investment representing £7m of investment by Global Net members with shareholdings in Quadris, maintains the controller is trying to claim victory in defeat. He said: ’This would be a total disaster for shareholders and a complete capitulation to the demands of Crestline.

’Based on the recent sale of Floresteca assets it would leave fixed income investors with nothing and variable share class investors with 4p in the pound.

’Crestline’s bullying tactics would be rewarded with $84m in September 2019 leaving remaining shareholders with $6m. This on a loan of $17.5m and a distressed share purchase of $7m, a whopping 242% return in five years.’

Quadris posted a $20m loss last year, with auditors raising significant concerns about the company’s ability to continue as a going concern.