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Bear Stearns funds file for bankruptcy

Two Bear Stearns Cos. hedge funds involved in mortgage investments have filed for bankruptcy, court documents the US investment bank filed said Wednesday.

The Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. filed for protection under Chapter 15 of the federal bankruptcy code, the documents said. Chapter 15 deals with ‘cross-border insolvency’ because the funds are registered in Britain’s Cayman Islands in the Caribbean.

Bear Stearns, the fifth-largest US investment bank, told investors July 17 the two hedge funds were almost worthless, with the enhanced-leverage fund essentially valueless and less-leveraged fund worth 9% of its April value. A Bear Stearns spokesman was not immediately available to comment.

Bear Stearns said Tuesday it froze the assets in a third fund, the Asset-Backed Securities Fund, which had put some $900 million in mortgage investments, stopping investors from taking their money from it. (