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. (monstersandcritics.com)