Caymen Net News – (Bloomberg) – US investment bank Bear Stearns Cos. faces an unusual adversary in trying to reverse a ruling denying two of its bankrupt Cayman Islands hedge funds protection from US lawsuits while they liquidate here in Cayman: the author of the law the ruling is based on.
The funds asked US District Judge Robert Sweet on Wednesday to overturn a bankruptcy court decision denying them protection from creditors. The Cayman Islands-based funds want to be shielded from US suits as they wind down under the supervision of liquidators here. The decision may set a precedent for other hedge funds based abroad that have US operations.
Bear Stearns lawyer Fred Hodara invoked a 2005 bankruptcy law that can shield a foreign company from US creditors while it liquidates overseas. He cited as authorities on the law two of its authors, both of whom oppose him in this case: Jay Westbrook, a professor at the University of Texas, and US Bankruptcy Judge Burton Lifland of Manhattan, who issued the disputed ruling.