Bankruptcy Code Chapter 15 Alert Memo

On August 30, in the Chapter 15 proceedings brought by foreign representatives of two Bear Stearns funds seeking to be liquidated in the Cayman Islands, Judge Burton Lifland of the United States Bankruptcy Court for the Southern District of New York issued a decision that explains the burden of proof on the foreign representatives of foreign proceedings with respect to recognition of the foreign proceeding as either a “main” or “non-main” proceeding under Chapter 15 of the Bankruptcy Code. The ruling, which was amended in minor respects on September 5, 2007, holds that the mere presence of a company’s registered office in the Cayman Islands, alone, is insufficient under Chapter 15 of the Bankruptcy Code to warrant recognition of a Cayman Island liquidation proceeding in the United States as either a “main” or “non-main” proceeding where there is contrary evidence that the center of main interests of the foreign company is not where its registered office is, and where the foreign company has no actual “establishment” where it was registered. Please do not hesitate to use the contact information included in the Memorandum if you have any questions.

CLEARY GOTTLIEB STEEN & HAMILTON LLP