Reuters, citing a source, reported on Monday that Elliott had launched contractual proceedings which could see it become the majority owner of the storied club.
Chinese businessman Li Yonghong bought the Serie A club last year from former Italian prime minister Silvio Berlusconi with the help of Elliott.
Elliott also lent additional money to the team to fund the purchase of players and repay the club’s debts with banks.
However, Li failed to repay Elliott, paving the way for legal action that could see Elliott become the new owner of the Italian soccer club, Reuters reported last week.
Li has been looking for months for new investors to share the financial burden of the loss-making club, which last month was banned from next season’s Europa League competition because of its uncertain finances.
Elliott, which plans to inject further capital over time, said it aims to run a sustainable operating model that respects UEFA Financial Fair Play regulations.
AC Milan, a seven-time European champion, is expected to have closed the financial year to the end of June with a loss of 75 million euros.