I don't know what specific deals they have with LPs, but why would it make a priori sense to force the fund to liquidate some specific shares and distribute the

I don't know what specific deals they have with LPs, but why would it make a priori sense to force the fund to liquidate some specific shares and distribute the proceeds? I would imagine that any fund is allowed to make losses on specific investments, least of all a hyper-aggressive VC fund which will create losses on many (most) positions, by design. And then once losses happen they should be treated for what they are - just another position where decisions should be made based on the outlook, and not based on the history.