Liquidators of the scandal struck Manhattan Investment Fund will this week argue in the Bermuda Supreme Court that all creditors be treated equally.

The motion comes after some creditors of the fund applied to the Bermuda Court for a special dispensation to pursue claims on their own despite their actions being blocked by Bermuda law.

According to the law, while the liquidators are investigating what happened, all other legal actions against the fund are put on hold.

A whole stream of individuals and companies filed writs against the hedge fund which went belly up earlier this year after it lost $500 million of investments.

The fund, which was registered in the British Virgin Islands but was administered and audited by Bermuda companies, had claimed it made huge profits, but it admitted in January that it had lost all the money.

So far 10 separate writs have been filed in Bermuda alone against the fund, its organisers and the Bank of Bermuda as its banker.

But these actions were automatically put on hold by both Bermuda and British Virgin Islands law as the liquidators investigate what happened.

In a letter to creditors, Manhattan Investment Fund's joint provisional liquidators, Malcolm Butterfield of KPMG Bermuda and Tony McMahon of KPMG London, said that some of the litigants with proprietary claims -- claims that allege money under the control of the liquidators belongs to them -- are seeking leave of the Bermuda Court to have the automatic stay lifted in order to continue to process their claims against the fund.

The liquidators have put in their own motion which is due to be heard at the same time as the proprietary claims in court, to propose the motion be adjourned and to make sure that they are able to pay their own fees and those of their advisors from the monies arrested.

In the letter the liquidators stated: "The joint liquidators consider that all investors in Manhattan Investment Fund should be treated equally -- in other words all creditors with a valid claim are entitled to a pro rata share of the total value of the fund's estate.'' The fund scandal was unearthed after Deloitte and Touche LLP, the Bermuda auditors of the fund withdrew approval for the fund's financial statements from 1996, 1997 and 1998.

A subsequent investigation by fund administrator and local Ernst & Young affiliate Fund Administration Services (Bermuda) Inc, revealed the extent of the losses and accused the fund's managers of misrepresentation.

The Bermuda Registrar of Companies took the Manhattan Investment Fund to the Supreme Court in March to officially wind up the fund.

In January and February 11 separate writs were filed at the Supreme Court in Bermuda against the fund, its administrators, the Bank of Bermuda as the trust's bankers and Michael Berger, the man behind the scandal.

So far claims total $4.762 million in Bermuda alone.

Most of those who have filed these writs are considered proprietary claimants except for one which was issued by the registrar of companies and related to the winding up and appointment of liquidators.

Over 250 investors bought over 2.5 million shares in the company.

Among those who bought into the fund were a number of high profile multi-managers and institutions.

The KPMG team have also asked the firms accountants, Deloitte and Touche, to hand over all their books and records in relation to Manhattan Investment.

A meeting of creditors will be held at the Fairmont Hamilton Princess in Bermuda next week on June 6.

COURTS CTS