September 1, 2007 (LPAC)--Lyndon LaRouche has lauded a Federal Bankruptcy Court Judge's Aug. 30, 2007 ruling, quashing efforts by Bear Stearns to assert Cayman Islands sovereignty over two of their New York-based hedge funds that recently went bust in the sub-prime mortgage blowout. "Look at what this means," said LaRouche. "The sovereign of the Cayman Islands and other off-shore entitites is the Queen. Will the British monarch concede that she will not extend protection to corporations attempting to use her territory as a means of defrauding American investors?" The court ruling has dramatic implications for the entire Anglo-Dutch offshore, unregulated financial system, at the heart of the global bubbble.

The Aug. 30 ruling by Judge Burton R. Lifland, of the United States Bankruptcy Court in New York, rejected claims by Bear Stearns that two of their now-bankrupt hedge funds, could file their bankruptcy liquidation proceedings on the Cayman Islands, rather than in the United States. The Judge did a careful review of Chapter 15 proceedings under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which allows companies primarily based abroad, to file liquidation proceedings in their primary location and receive U.S. court approval for those findings. In the case of Bear Stearns' High-Grade Structured Credit Stratgegies Master Fund, Ltd. and High-Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd., Judge Lifland found that "The Petitioner's own pleadings provide the evidence to establish that the Funds' COMI ("center of main interest'') is in the United States, not the Cayman Islands. The only adhesive connection with the Cayman Islands that the Funds have is the fact that they are registered there... The Verified Petitions have demonstrated... there are no employees or managers in the Cayman Islands, the investment manager for the Funds is located in New York, the Administrator that runs the back-office operations of the Funds is in the United States along with the Funds' books and records and prior to the commencement of the Foreign Proceeding, all of the Funds' liquid assets were located in the United States... Thus I cannot grant recognition of the Foreign Proceedings as main proceedings.''

Judge Lifland went even further, rejecting Bear Stearns' claims that they conducted "nonmain'' business on the Cayman Islands, allowing a back-door access to their jurisdiction. The ruling found that the two Bear Stearns funds did not even conduct "nontransitory economic activity'' on the island, and there were no funds deposited there until after the bankruptcy filing. "Accordingly,'' Judge Lifland wrote at the conclusion of his 19-page opinion, "because the Foreign Proceedings are not pending in a country where the Funds have their COMI or where they have an establishment, the Foreign Proceedings are not eligible for relief as main or nonmain proceedings under chapter 15.''

Briefed on the Judge's ruling, Lyndon LaRouche declared on Sept. 1, "This is wonderful, because it puts the entire issue in the proper perspective. A U.S. Judge has rejected the idea of British sovereignty over what are fundamentally U.S. based financial entities, despite their 'letterbox' presence on the Cayman Islands. This is an assertion of U.S. sovereignty, against an attempted British invasion via the 'Pirates of the Caribbean.''' LaRouche added, "The Cayman Islands house some of the nasties crocodiles in all of the Caribbean. This is a ruling that has dramatic ramifications. I applaud the Judge's action.''