Caymen Net News- Offshore status may not protect Cayman Islands-registered companies from litigation in the USA.
The recent collapse of three Cayman-based hedge funds had fuelled fears that a 2005 amendment to the US Bankruptcy Regulations would prevent creditors of failed offshore entities pursuing civil claims in US Courts.
Under what it termed, “Chapter 15,†offshore companies, which faced bankruptcy, could petition local courts in the jurisdiction where they are registered even if the majority of their assets and operations were actually based in the USA.
Many financial experts believed that this would seriously limit the ability of creditors of failed offshore funds to recover debts and could completely prevent them from pursuing legal action against the funds’ parent companies.
