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Tax haven hedge funds threatened

Date: Thursday, February 5, 2009
Author: David Jetuah, Accountancyage.com

Thousands of hedge funds in offshore tax havens are expected to fold in 2009, warn Zolfo Cooper.

The head of restructuring giant Zolfo Cooper expects thousands of hedge funds to fold in 2009.

Simon Freakley told Accountancy Age that the company, which has handled the administrations of stricken airline XL Leisure and furniture retailer MFI, was preparing for a surge in activity in offshore tax havens.

Many of the hedge fund holding companies are incorporated in the Cayman Islands and the British Virgin Islands, where Zolfo Cooper has a presence.

‘In the British Virgin Islands there’s something like 10,000 hedge funds registered and recent commentary has suggested that as many as 4,500 will close,’ he said.

‘If a court procedure is required, you have to be able to take the provisional liquidation in Cayman or the BVI to be able to handle the activities that may be indeed be located in the US or Europe.’

Freakley added that the financial turmoil had seen a lot of investment banking staff applying for jobs.

‘We’re not just recruiting people with restructuring and insolvency experience, we’re recruiting those with transactional and financial modelling skills because we need those skills in house.