NEW YORK (Reuters) - Bermuda-based financial guaranty reinsurer BluePoint Re Ltd. has filed for Chapter 15 bankruptcy protection in New York, citing defaults on mortgage-related products.

BluePoint filed for bankruptcy protection on August 7 in Bermuda and is seeking to have those court proceedings recognised in the US, according to court papers filed in New York on Wednesday. BluePoint said it has more than $100 million in debt.

Companies file for Chapter 15 bankruptcy in the United States when they have primary proceedings already occurring in other countries.

According to its website, BluePoint plans to go into liquidation.

The company is wholly owned by Wachovia Corp., which formed it as a financial guaranty reinsurer in late 2004. Wachovia wrote down substantially all of its $300 million investment in BluePoint in February, according to a statement at the time.

BluePoint reinsured both structured financial products and US municipal debt insured by monoline financial guaranty companies.

BluePoint Re, the smallest reinsurer in the bond-insurance industry according to Moody's Investors Service, had its credit rating cut 14 levels to Ca from A2 by the agency yesterday. Moody's had lowered its rating two notches from Aa3 on July 11.

The reinsurer has been battling concerns about its capital adequacy since it booked an unrealised loss of about $370 million in 2007, mostly due to troubles in its credit default swaps portfolio, according to an affidavit filed on Wednesday by the company's Bermuda court-appointed liquidator John McKenna.

BluePoint tried to restructure its credit default swaps with various counterparties, but credit markets continued to deteriorate and last month its restructuring attempt failed when Wachovia said it would not provide any further capital to BluePoint to restructure the portfolio, the affidavit said.

"Wachovia has consistently indicated that it had no obligation to inject additional capital into BluePoint," Wachovia spokeswoman Christy Phillips-Brown said.

"Wachovia has determined that it will not make any additional investment in BluePoint. This is the right decision for our company and one that is in the best interest of our shareholders."

BluePoint is not the only Bermuda financial guaranty reinsurer to run into trouble this year. In January, investors in Channel Reinsurance Ltd. — another Bermuda financial guaranty reinsurer that did business solely with the largest US bond insurer, MBIA Inc. and has been hard hit by losses — wrote down their investments in that company.