Investment company Carlyle Capital said on Wednesday that its liquidators have determined the fund to be insolvent and that investors were not likely to get any proceeds after its operations wind up.
Amsterdam-listed Carlyle, which late on Tuesday asked for trade in its shares to be suspended, said in a statement that it had "extremely limited cash assets".
Carlyle Capital, a separate legal and business entity from U.S. private equity firm Carlyle Group [CYL.UL], declared itself effectively out of business 10 days ago, after its counterparties called in their loans and seized its Residential Mortgage-Backed Assets (RMBS).
Carlyle Capital had defaulted on $16.6 billion of debt.
The fund is 15 percent-owned by Carlyle Group executives and is based on the British offshore centre of Guernsey.
In a preliminary assessment of CCC's financial position, liquidators said that "all of the RMBS assets of CCC have been subject to enforcement by lending banks following default on the terms of facilities provided to CCC", Carlyle Capital said.
The fund still has "substantial liabilities" that were yet to be determined, but they were likely to exceed CCC's remaining assets making it insolvent, the fund added.
Carlyle Capital shares were down 34 percent at $0.25 at 1217 GMT.
The initial public offer price 10 months ago was $19. Carlyle Capital was hit severely by the impact of the credit crisis on leveraged investors. News of its default weighed on global markets last week.
The crisis was triggered last year when risky mortgages made to U.S. borrowers went sour putting pressure on lenders to tighten credit and making it difficult to value collateralised debt, mortgage portfolios and other fixed-income securities.