Cayman Islands liquidators can begin salvaging what’s left of two failed Bear Stearns hedge funds, after the Grand Court approved winding up applications Friday.
The two funds were among the most prominent casualties of the recent US sub-prime mortgage crisis.
Justice Priya Levers assented to the petition, paving the way for liquidators to begin winding up the two failed Bear Stearns’ funds, estimated to have had as much as US$1.5 billion in capital as recently as March.
According to an AP report, liquidators now expect the High-Grade Structured Credit Strategies Master Fund could see recoveries of US$25 million, and the smaller High-Grade Structured Credit Strategies Enhanced Leverage Fund could see recoveries of less than $50 million.
The liquidation will proceed here, despite a US Bankruptcy Court ruling 30 August that refused to recognise the Cayman Islands as the correct jurisdiction for the liquidation. The US judge refused to grant the funds permanent protection from claims by US creditors, saying ‘the only adhesive connection with the Cayman Islands that the funds have is the fact that they are registered there.’
Sandie Corbett of Walkers appeared at the hearing for the Bear Stearns funds. She noted that no party had registered their opposition to the winding up notice, which appeared in the Cayman Islands Gazette 20 August.
Provisional Liquidators Simon Whicker and Kris Beighton, both of KPMG’s George Town office, are now instated as liquidators for the two funds.
The hearing comes after a failed Australian managed fund registered in the Cayman Islands was told Wednesday that it needs to prove it does enough business in the Cayman Islands to win court protection from US creditors.
Bloomberg reported that Bankruptcy Judge Robert Gerber in New York asked for evidence showing where Basis Yield Alpha Fund’s back office operations were conducted, where the fund’s assets and personnel were located, where the financial records were kept and who actually conducted the fund’s business.
The fund won recognition of its Cayman Islands liquidation in a UK court 5 September. It will present evidence for protection in the US at a hearing scheduled for 19 November.
Related Videos
