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Bear Stearns Fund Seeks to Dissolve

A Bear Stearns investment fund hurt by the decline in the subprime mortgage market and facing creditors’ complaints about its management asked a Delaware judge to allow it to dissolve and liquidate its assets.

Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund LP was linked to a Cayman Islands-based fund shutting down because of the collapse in value of investments tied to subprime mortgages, the investment firm’s lawyers said Nov. 13 in a filing in Delaware Chancery Court in Wilmington. New York-based Bear Stearns is the fifth-largest U.S. securities firm by market value.

More than three months ago, Bear Stearns placed several hedge funds decimated by subprime mortgage losses in bankruptcy in the Cayman Islands. The company cited volatility in the subprime- lending market and subsequent margin calls for the July filings.

The world’s largest financial institutions have written down more than $21 billion of mortgages, securities and corporate loans whose value fell during the third quarter. A surge in defaults of poor-quality home loans has prompted more than 110 mortgage companies to close, seek bankruptcy protection or put themselves up for sale since the start of 2006.