On August 26, 2011, the United States Bankruptcy Court for the Southern District of New York granted a petition by the joint liquidators of Millennium Global Emerging Credit Master Fund Limited (Master Fund) and Millennium Global Emerging Credit Fund Limited (Feeder Fund, collectively the Funds) seeking, inter alia, recognition in the United States of a Bermuda liquidation proceeding as a “foreign main proceeding” or “foreign nonmain proceeding.” The decision is a noteworthy development on an obscure but important area of law for distressed debt hedge funds. The case has particular relevance for hedge funds organized in Bermuda, because the Court also reaffirmed that Bermuda has a sophisticated, fair and impartial legal system entitled to recognition and comity in the United States. For a comparison with the problems of recognition facing Cayman Islands proceedings, see “Delaware Bankruptcy Court Recognizes Cayman Islands Proceeding as ‘Foreign Main Proceeding’ Under Chapter 15 of the U.S. Bankruptcy Code
,” Hedge Fund Law Report, Vol. 3, No. 6 (Feb 11, 2010). For more on the recent changes to the definition of “center of main interests," see “Amendments to Bankruptcy Rule 2019 Recently Approved by the U.S. Supreme Court Add Disclosure Requirements While Protecting Distressed Debt Funds’ Proprietary Trading Strategies
,” Hedge Fund Law Report, Vol. 4, No. 16 (May 13, 2011). This article details the background of the action and the Court’s pertinent legal analysis.