Liquidators of Bear Stearns funds lose court appeal

Liquidators of Bear Stearns funds lose court appeal
Wed May 28, 2008 1:34pm EDT

By Martha Graybow

NEW YORK (Reuters) - Representatives of two collapsed Bear
Stearns Cos Inc (BSC.N: Quote, Profile, Research) hedge funds
linked to risky mortgage investments have lost a court appeal
seeking to have the funds liquidated in the Cayman Islands
instead of in the United States.

The ruling by U.S. District Judge Robert Sweet in Manhattan
upholds a bankruptcy court's decision last year requiring that
the funds be liquidated in U.S. courts. Holding the proceedings
in the Cayman Islands, home to many hedge funds for tax reasons,
could have shielded the funds' assets from some U.S. creditors.

The ruling could have implications for other funds that seek
protection under Chapter 15 of the U.S. Bankruptcy Code, which
covers cross-border insolvencies. The judge upheld the
bankruptcy court's finding that the funds' "center of main
interests," as defined by Chapter 15, was in the United States.

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