CNBC- A federal judge on Monday barred investors from seizing the assets of two Bear Stearns Cos. hedge funds for 10 days, but indicated he is considering lifting the funds’ U.S. bankruptcyprotections.<\/p>\n
Judge Burton Lifland of the U.S. Bankruptcy Court in Manhattan said he hadn’t reached a decision on the funds’ request for U.S. Chapter 15 protection, which would allow the funds to seek bankruptcy-law protection in the United States while liquidating in the Cayman Islands.<\/p>\n
The two funds bet heavily on subprime mortgage loans and as defaults increased, creditors began to clamor for their collateral, leaving the funds short on cash.<\/p>\n
Provisional liquidators working to unwind the funds in the Caymans estimate that the High-Grade Structured Credit Strategies Master Fund could see recoveries of $25 million, and the smaller High-Grade Structured Credit Strategies Enhanced Leverage Master Fund could see recoveries of less than $50 million.<\/p>\n
Bear Stearns stepped in and bought out investors’ positions after big Wall Street firms started fleeing the larger fund earlier this year.<\/p>\n
Lifland said it appears the two funds, though registered in the Caymans, operated primarily out of New York.<\/p>\n