Cayman Net News – The latest attempt by a hedge fund to use its Cayman Islands registered status to escape bankruptcy action in the USA appears to have failed.
On Monday in New York, US Bankruptcy Judge Robert Gerber ruled that the ongoing liquidation of Basis Capital Funds Management Ltd’s Basis Yield Alpha Fund in Grand Cayman did not protect it from creditors’ claims in the USA.
Last November, the company’s lawyers had asked permission to forego an evidentiary hearing on the extent of its business in the Cayman Islands, arguing that the lack of objections made the hearing unnecessary.
Judge Gerber failed to agree, observing that the court’s power to ascertain the facts cannot be sidestepped by failures to object. He also ruled that the fund had failed “to put forward the relevant facts.”
Basis Capital Funds, like Bear Stearns after two of their Cayman-registered hedge funds collapsed last year, tried to qualify for bankruptcy protection in USA under Chapter 15 of the US bankruptcy code.
If successful, the application could have severely limited creditors’ access to company funds in the USA.
