Image-conscious Bermuda is unlikely to open its doors wider to attract more asset protection trusts because of the potential problems that go with them, said one of the Island's leading lawyers.

Unlike other offshore jurisdictions, Bermuda is taking a cautious approach to APTs, said Mr. John Campbell, the senior partner in Appleby, Spurling and Kempe.

"A number of offshore jurisdictions have enacted quite aggressive asset protection laws,'' he said.

"But Bermuda has taken a somewhat conservative stance and feels it's a very difficult and delicate area to deal with.'' Bermuda is currently looking at what changes, if any, need to be made in the area of APTs, said Mr. Campbell, who is president of AS&K's licensed trust company, Harrington Ltd.

Bermuda is seeking to balance the interests of the well-intentioned person making a settlement (the settlor), on the one hand, with those of his legitimate creditors.

"We don't want to attract the type of business which will undermine Bermuda's reputation as a blue chip offshore financial centre,'' he said.

Bermuda does not want to introduce legislation which would attract the type of person who is likely to bring a stream of creditors in his or her wake, he said.

Some jurisdictions, beginning with the Cayman Islands and followed by the Bahamas, the Turks and Caicos Islands, Gibraltar and the Cook Islands, had encouraged business which was "highly dangerous'', said Mr. Campbell.

"For example, let's take a physi cian practising medicine in the US who is embarking on a course of surgical operations and, in case anything goes wrong, requires adequate insurance to cover negligence claims.'' "Some jurisdictions are encouraging him to put his assets into an offshore trust with the intent of preventing potential creditors from having access to those assets,'' he said.

"Certain jurisdictions have legislated that, if he does that, those assets held in trust will not be accessible to any future creditors but only those that existed at the time that the trust was established.'' In Gibraltar, for example, if a trust meets certain criteria, the trust will be proof against "all creditors under all circumstances'', said Mr. Campbell.

Bermuda was looking at its own laws on the subject, particularly Section 37 of its Conveyancing Act.

He said: "This states that any transfer of property made with the intent to defraud creditors may be set aside at the insistence of the person thereby prejudiced. `Intent to defraud' does not necessarily mean quite what it sounds like. It's to be construed more broadly.

"The question being addressed is -- where is Bermuda going to come in all of this?.

"At the end of the day, Bermuda will still not be marketing itself as a jurisdiction for asset protection trusts.

"We have to set a happy medium whereby Bermuda will provide some reassurance for the well-intentioned settlor without, at the same time, undermining its own credibility and, therefore, its own hard-earned reputation.'' AS&K's John Campbell.