Both funds, the Bear Stearns High-Grade Structured Credit Strategies Master Fund and the Bear Stearns High-Grad Structured Credit Strategies Enhanced Leverage Master Fund have filed for protection under chapter 15 of the bankruptcy code.
The move comes as lawyers acting on behalf of investors have filed an arbitration claim with the National Association of Securities Dealers alleging that Bear Stearns misled investors over the degree of exposure the two funds had to the sub-prime mortgage market.
Meanwhile, Bear Stearns' woes continued with the announcement that it has suspended withdrawals from a third fund.
The Asset-Backed Securities Fund had $850 million invested in mortgage-backed securities.
A statement from Bear Stearns said that the move was intended to prevent it being compelled to sell assets at a time when they would likely yield poor returns and reassured investors that the fund in question was not close to collapse.