Nine investment funds managed by a Baton Rouge firm have been placed into Chapter 11 reorganization proceedings in Wilmington, Del.

That action was taken last week as a civil suit alleging mismanagement remained pending in Baton Rouge against the management firm, Commonwealth Advisors Inc., its president and chief investment officer, Walter A. Morales III, and others.

“This is an unusual bankruptcy filing because the funds do not have any debt,” Morales said in a written statement Tuesday.

“The purpose of the filing was to expedite the settlement of litigation involving our funds, our firm, Cantor Fitzgerald (& Co. of New York) and an investor in the funds,” Morales added.

The Baton Rouge civil suit before U.S. District Judge James J. Brady was filed a year ago by local resident Joseph N. Broyles and other investors. It alleges Louisiana investors owned more than $178 million of the combined assets in four of Commonwealth’s managed funds in October 2007.

The investor suit also alleges that money was part of more than $740 million from Commonwealth-managed funds that purchased inflated mortgage notes and other over-valued real estate investments from Cantor Fitzgerald in November 2007 and June 2008.

The investor suit also alleges Cantor Fitzgerald required Commonwealth to purchase those assets in return for Cantor Fitzgerald’s hiring of Commonwealth to manage $1 billion in assets of Collybus CDO I Ltd. and Collybus CDO I Corp.

Both Commonwealth and Cantor Fitzgerald are fighting that allegation in federal court.