August 7, 2007 (LPAC)--The two Bear Stearns' hedge funds that went belly up, have filed for bankruptcy in a Cayman Islands court, so as to prevent creditors from seizing their assets, which are mostly in the United States. The move is expected to be challenged by creditors.

This points to the truth of Lyndon LaRouche's insistence that it is the British-Empire headquartered hedge funds which really run America's banks, not the other way around.

Three quarters of the worlds hedge funds are registered in the Cayman islands according to a report in Bloomberg, so other funds may do the same. The Cayman Islands are under British control, and as Jay Westbrook, a professor at the University of Texas Law School says, the Cayman courts make it "difficult to take legal action there," and are "much less transparent than American Courts," thus making the islands "attractive to management."

Bear Stearns also managed to get a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the proceedings in the Cayman courts. This was made possible by Chapter 15 of the new U.S. bankruptcy code passed by Congress in 2005, which allowed U.S. courts to cooperate with foreign liquidations.

Now this law will be tested. One expert says filing for bankruptcy in the Caymans "is a nice little stunt, and it may work for a while... Bear Stearns is trying to put a wall between themselves and these so-called rogue funds."

Lawyers for the U.S. creditors will argue that the center of activities as well as assets are in the U.S. and not in the Caymans, and therefore the filing should take place in New York.