It may be legal but it sure ain’t right:
Aug. 7 (Bloomberg) — Bear Stearns Cos.’ decision to liquidate two bankrupt hedge funds in the Cayman Islands instead of New York may limit creditors’ and investors’ ability to get their money back.
While most of their assets are in New York, the funds filed for bankruptcy protection July 31 in a court in the Caymans, where they are incorporated. The bank also used a 2005 bankruptcy law to ask a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the Caymans proceedings.
The Bear Stearns cases may establish a precedent that would let other failed hedge funds liquidate in the Caymans, where judges have a track record of favoring management. The local monetary authority estimates that three out of four hedge funds globally are incorporated in the islands.
It ain’t right but it certainly is par for the course. If anybody doubts (and at this point it’s almost moronic of me to think anybody doesn’t get it) who is taking care of whom, all you need to do is look at the bankruptcy laws that were passed in 05 (06?). It’s not ok for individuals to get out from under bad debt and start again but it’s a cathecism that businesses should be able to.
Makes you want to weep.
Yes, the ‘free market’ always takes care of everything…
wait you mean that same bankruptcy law that was supposed to make people (regular ones) pay back a larger portion of their debts because the Credit Card co’s (MBNA) were bitching that people were cranking up their credit cards and could actually pay them back?
shocking….
Have you any idea what it costs to incorporate in the Caymans? More importantly have you any idea what is required of those investors who choose to put their money into hedge funds - the net worth, liquidity and transparency benchmarks are extremely high.
No one sets the goal of going out of business, darling, but it happens. Why not try and make it less painful?