COMMITMENTS AND CONTINGENCIES (Ares Holdings, Inc. and Ares Investments LLC)

3 Months Ended

Mar. 31, 2014

Ares Holdings, Inc. and Ares Investments LLC

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

Performance Fees

        Performance fees from certain limited partnerships are subject to reversal in the event that the funds incur future losses. The reversal is limited to the extent of the cumulative performance fees received to date. If all of the existing investments became worthless, the amount of cumulative revenues that had been received by the Company would be returned less the income taxes paid thereon. Management believes the possibility of all of the investments becoming worthless is remote. The Company may be liable to repay certain limited partnerships for previously received performance fees. This obligation is generally referred to as a clawback. At March 31, 2014 and December 31, 2013, if we assumed all existing investments were valued at $0, the amount of performance fees subject to potential clawback would have been approximately $565.2 million and $608.5 million, respectively, of which approximately $454.6 million and $489.8 million, respectively, is reimbursable to the Company by professionals. If the funds were liquidated at their then current fair values as of March 31, 2014 and December 31, 2013, there would be no event of clawback. For all periods presented, the Company did not accrue any expense associated with the clawback obligation.