Highland Capital Management, a Texas fund manager that became one of the world’s largest and most feared investors in corporate debt, is being forced to fight a multi-front battle to ensure that it does not become a victim of the sliding value of its holdings.

Highland, which manages $40bn, made its name by investing in the leveraged loans that private equity firms use for acquisitions – and then driving hard bargains with borrowers. Its tactics have included demanding big fees before agreeing to concessions for companies that had difficulty paying back debts.