Saturday, December 1, 2012

In re Bear Stearns High-Grade Structured Credit Strategies Master Fund case brief (Bankruptcy Law)

In re Bear Stearns High-Grade Structured Credit Strategies Master Fund (Bankr. SDNY 2007)

Facts: The two joint provisional liquidators of two investment funds filed petitions under §1515 for recognition of their liquidation of funds in the Cayman Islands as foreign main proceedings under §1517 or foreign non-main proceedings in 1502(5) and relief under §1521. 
Issue: Were these foreign proceedings eligible for recognition? Only if they met definitional requirements of either a foreign main proceeding or non-main proceeding.

Holding: No! They are not eligible for relief as main or non-main proceedings

Analysis: The Foreign proceeding must be in a country where the debtor has its center of main interests (PPB) or have an establishment. Establishment = anywhere the debtor carries out a non-transitory economic activity.
  • Main Proceeding
    • Debtor must be proceeding where it has its COMI.
    • §1502(4)
  • Foreign Non-main proceeding
    • Debtor must have establishment where the proceeding is happening
    • §1502(5)
  • Presumption
    • §1516
    • Absence of evidence then we assume the debtor’s registered office is their COMI.
    • If there is evidence to the contrary then the foreign representative must offer proof
    • Location of HQ, location of managers, debtor’s assets, majority of creditors, jurisdiction whose law would apply to most disputes can be offered.

  • Main Analysis: Petitioners pleadings say the US is their COMI = PPB – FAIL TO MEET MAIN Proceeding
  • Non-main proceeding analysis: Must have an “establishment” in the Caymans. Look to National law. The debtor has no establishment in the Caymans. They only have a shell corp.
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