Contact: John Hartgen
703-739-0800
href='mailto:jhartgen@abiworld.org'>jhartgen@abiworld.org
BANKRUPTCY COURT CORRECTLY CONCLUDED
TWO OVERSEAS BEAR STEARNS HEDGE FUNDS WERE NOT ENTITLED TO CHAPTER 15
PROTECTION, ACCORDING TO LATEST ABI QUICK POLL
August 11, 2008,
Alexandria, Va. — A majority of respondents (52 percent) in a
recent ABI Quick Poll agreed that a bankruptcy court was correct in
concluding that two overseas Bear Stearns hedge funds were not entitled
to recognition under chapter 15 of the U.S. Bankruptcy Code.
Thirty-eight percent of respondents “strongly agreed” and 14
percent “somewhat agreed” that the court was correct in
determining that the hedge funds had to file under chapter 11 of the
Bankruptcy Code or continue with an overseas liquidation.
Thirty-five percent of respondents, however, thought
that the bankruptcy court erred in not allowing the two overseas Bear
Stearns hedge funds to file under chapter 15 of the Bankruptcy Code.
Twenty-one percent “disagreed strongly” and 14 percent
“somewhat disagreed.” Ten percent of respondents did not
know or had no opinion on the issue.
In the case of In re Bear Stearns High-Grade
Structured Credit Strategies Master Fund Ltd., the bankruptcy judge
declined to recognize that the two bankrupt Bear Stearns hedge funds
satisfied the requirement established by chapter 15 to have a
“center of main interest” outside the United States. While
the two hedge funds were incorporated under Cayman Island law, none of
the funds’ employees, managers or investors were based in the
Cayman Islands and that the assets and records of the two funds were
located in the United States, according to the judge’s ruling.
Despite an appeal by Bear Stearns, the bankruptcy court’s ruling
was affirmed by a district court that the two hedge funds would have to
either file in the United States under chapter 11 or liquidate under
Cayman law.
ABI members and members of the public were welcome to
submit their response to the statement: “The bankruptcy court did
not err in concluding that the two overseas Bear Stearns hedge funds
were not main or nonmain proceedings entitled to recognition under
chapter 15 of the Bankruptcy Code. In re Bear Stearns High-Grade
Structured Credit Strategies Master Fund Ltd., S.D.N.Y. No. 07-12383,
5/27/08).
ABI’s Quick Poll is posted on ABI’s home
page, www.abiworld.org. ABI members
and the public are invited to respond to a question on a timely
bankruptcy or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>
color='#0000ff' size='3'>http://www.abiworld.net/quickpoll/
to access the results of previous ABI Quick
Polls.
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organization dedicated to research and education on matters related to
insolvency. ABI was founded in 1982 to provide Congress and the public
with unbiased analysis of bankruptcy issues. The ABI membership includes
nearly 11,700 attorneys, accountants, bankers, judges, professors,
lenders, turnaround specialists and other bankruptcy professionals,
providing a forum for the exchange of ideas and information. For
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