By Tom Hals

DOVER, Del. (Reuters) - Embattled investor Lynn Tilton defended herself in a Delaware court on Wednesday against allegations that she had not disclosed the complex holdings of $2.5 billion distressed debt funds that she lost control of this year.

The flamboyant Tilton testified for five hours about complex loan vehicles known as the Zohar funds that she created more than a decade ago. The funds have financed her investments in ailing companies such as Dura Automotive Systems, earning her the title of "Diva of Distressed."

However, after one of the three Zohar funds defaulted, Tilton's Patriarch Partners investment firm stepped down as the collateral manager and was replaced by restructuring firm Alvarez & Marsal in March.

In April, A&M sued Patriarch to get access to documents on the Zohar collateral.

Tilton testified in Delaware's Court of Chancery that A&M had all the documents it needed.

She said some Zohar holdings included the equity of borrowers, and those borrowers were also companies in the Patriarch Partners portfolio. Tilton said the Zohar funds did not have to provide stockholding details to A&M, because she retained control over the equity.

Tilton declined to comment after the close of the two-day trial.

A lawyer for A&M said he looked forward to a ruling granting access to the Zohar documents.

"This trial demonstrates that Ms. Tilton has been playing a shell game with valuable assets," said Michael Carlinsky of the Quinn Emanuel Urquhart & Sullivan law firm.

A&M's Bryan Marsal, testifying by video link from Paris, said "there was a complete lack of transparency" by Patriarch and that the firm "had a history of not living up to what it promised."

Tilton said things soured with Marsal after he questioned her resolve.

"He told me to toughen up," she testified. "He told me I was all drama, drama, drama."

Vice Chancellor Joseph Slights said the dispute stemmed from a lack of trust. "It is a bit perplexing to me that two parties that on the surface appear to have almost entirely identical interests are not able to sit in a room and just figure out an exchange of information."

He said he would hear closing arguments in September.

The Securities and Exchange Commission has brought a fraud suit against Tilton and Patriarch and accused them of hiding the poor performance of assets underlying the Zohar funds and allegedly collected nearly $200 million in improper fees.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio)