In a decision rendered late last week, Judge Lifland of the Southern District of New York Bankruptcy Court refused to recognize under chapter 15 of the Bankruptcy Code, either as “foreign main proceedings” or as “foreign nonmain proceedings,” the well-publicized liquidations brought in the Cayman Islands by two Bear Stearns hedge funds that were victims of volatility in the sub-prime lending market.
The Privy Council sitting as the final court of appeal for the Cayman Islands recently considered a case concerning prioritisation in a Liquidation between feeder hedge funds where the investment medium was redeemable shares.
Background
The appellant in this case was the Liquidator of Herald Fund SPC ("Herald"). Herald is a Cayman Islands registered hedge fund that invested heavily into Bernard L Madoff Investment Securities LLC, the historic Ponzi scheme run by Bernard Madoff that collapsed spectacularly in 2008.
In a recent decision,1 Judge Sweet of the United States District Court for the Southern District of New York affirmed a bankruptcy court decision and refused to recognize under chapter 15 of the Bankruptcy Code either as “foreign main proceedings” or as “foreign nonmain proceedings” the well-publicized liquidations brought in the Grand Court of the Cayman Islands by two Bear Stearns hedge funds (the “Funds”).
A decision recently handed down by the U.S. District Court for the Western District of Washington should be of interest to lenders and distressed debt purchasers. In Meridian Sunrise Village, LLC v. NB Distressed Debt Investment Fund Ltd. (In re Meridian Sunrise Village, LLC), 2014 BL 62646 (W.D. Wash. Mar. 6, 2014), a lender group had provided $75 million in financing to a company for the purpose of constructing a shopping center.
Recent Developments
Recent Developments
Recent Developments
In the July/August 2010 edition of the Business Restructuring Review (Vol. 9, No. 4), we reported on significant changes to Rule 2019 of the Federal Rules of Bankruptcy Procedure ("Rule 2019") recommended by the Advisory Committee on Bankruptcy Rules (the "Rules Committee").
Bankruptcy headlines in 2007 were awash with tidings of controversial developments in the chapter 11 cases of Northwest Airlines and its affiliates that sent shock waves through the "distressed" investment community. A New York bankruptcy court ruled that an unofficial, or "ad hoc," committee consisting of hedge funds and other distressed investment entities holding Northwest stock and claims was obligated under a formerly obscure provision in the Federal Rules of Bankruptcy Procedure—Rule 2019—to disclose the details of its members' trading positions, including the acquisition prices.
The failed bid of liquidators for two hedge funds affiliated with defunct investment firm Bear Stearns & Co., Inc., to obtain recognition of the funds’ Cayman Islands winding-up proceedings under chapter 15 of the Bankruptcy Code was featured prominently in business headlines during the late summer and fall of 2007.