West Palm Beach (HedgeCo.Net) – Basis Capital Funds Management will not have the luxury of liquidating its failed fund in the Cayman Islands.
The Australian based company, whose Basis Yield Alpha fund was domiciled in the Caymans, originally sought U.S. Protection, but withdrew its petition to have the funds liquidated offshore. US Bankruptcy judge Robert Gerber granted the withdraw yesterday in a Manhattan court.
Funds must prove that a majority of their business is conducted in the Caymans, in order to be granted protection from US creditors. Basis had requested this without providing any evidence about the location of their business deals.
Many funds aim for this protection upon shutting down, since the Cayman government is thought to favor hedge fund management over US investors. This may offer some much needed shielding of the assets, often to the investors dismay.
Basis isn’t the only high profile fund to seek protection from Chapter 15 in the Caymans. The two Bear Stearns funds that imploded last year due to the subprime meltdown, sought protection in the Caymans, only to have a US judge deny their request. Lawyers for Bear Stearns are currently appealing that ruling.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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