Melvin Capital, the embattled hedge-fund run by Gabe Plotkin who was once a high-flying founder, is currently discussing with investors a unique plan under which they would return capital while giving them the ability to reinvest it in what would basically be Plotkin.

The terms were discussed and Plotkin would liquidate his fund at June’s end. The fund had fallen 21% by the end of quarter 1.

Plotkin would create what would be an essentially new fund with any money that his investors decide to reinvest. However, he wouldn’t have to return investors to the same level as their capital invested before he could get a performance-based fee.

Plotkin is unlikely to be able to pay much of Melvin’s capital due to the hedge fund manager’s obligation to bring their capital back to par before earning fees.

According to sources familiar with the plans of Plotkin’s fund, it has pledged to keep its capital at least $5 billion and to return to shorting stocks. This talent was something he had been known for for years before sustaining significant losses in the meme stock craze.

Plotkin would be able to use the plan to give him a fresh start after 18 months with very low performance. He could also keep his employees who might have left if he didn’t offer performance fees.

Melvins strong record of success prior to the recent disaster was due in large part to Plotkin’s ability to short stock stocks and make substantial profits. As his fund grew, this ability became less effective.

Point72 founder Steven Cohen is being offered the chance to see Plotkin manage their money in a smaller, more focused fund that focuses on the strength of his shorting stock stocks. However, they will forever give up any hope of him working to bring them to par on their existing funds.

Plotkin is not sure how the plan will be received or how many capital Plotkin’s shareholders will be willing and able to reinvest.

Many well-respected hedge fund managers have faced severe high water marks and decided to close their funds. However, it would still be an exceptional transition between one fund and another, with no immediate removal of high water marks.

Plotkin representatives could not reach us for comment, and Point72 officials declined to comment.