Alerts

District Court Affirms Decision to Deny Cayman Islands Hedge Funds Access to U.S. Bankrupcty Court Under Chapter 15

June 5, 2008

The United States District Court for the Southern District of New York recently affirmed a bankruptcy court’s denial of Chapter 15 protection for the U.S. assets of two Cayman Islands hedge funds (the “Funds”) (previously reported in SRZ’s Sept. 19, 2007, Alert, “Cayman Hedge Funds Liquidators’ Request for Chapter 15 Protection Denied by Bankruptcy Court”). See Civ. Case No. 07-8730 (S.D.N.Y. May 27, 2008) (the “Decision”). The Funds were the subject of pending liquidation proceedings in the Cayman Islands, but the district court found that they were ineligible for relief under Chapter 15 of the U.S. Bankruptcy Code (the “Code”). According to the district court, because the liquidations were not pending in a country where the Funds had their “center of main interests” or an “establishment” for the conduct of business, the bankruptcy court was correct in denying them Chapter 15 protection.