The impact of Covid-19 is clearly the big talking point for 2022, with several questions arising: will new variants emerge, what steps will governments take to limit the spread, and what impact will it have on industries? To date, enforcement actions, insolvencies and restructurings have been relatively light, but with new restructuring legislation reforms on the horizon, and creditors starting to ramp up speed to enforcement, it appears likely that there will be an increase in winding up and cross-border restructuring work.

2020 was a crippling year for the aviation industry. With daily cash burn running into the tens of millions of dollars for many airlines, access to liquidity has been critical as treasury teams and fleet managers juggle expenses with decimated revenue. Many governments pledged state aid but what has been delivered to date has simply not been enough.

The ‘Golden Goose’

In order to prevent the expense of annual 2019 government registration fees, an appointed liquidator will be required to hold the final general meeting for a company or file the final dissolution notice for an exempted limited partnership on or before 31 January 2019.

Key Points

• A trust can be created and enforceable in respect of assets sited in a jurisdiction that does not recognise the concept of a trust
• In circumstances where the owner of a beneficial right goes into liquidation, the transfer of legal rights held by a third party to a bonafide purchaser for value is not a disposition within the meaning of s127.

The Facts

In a recent judgment,[1] the Cayman Islands Court of Appeal (the “Court”) has upheld the decision of the Grand Court which found that investors who have redeemed their shares but remain unpaid at the commencement of a company’s liquidation are entitled to prove in the liquidation for their redemption proceeds as a creditor. This is the case irrespective of whether or not the company could lawfully have distributed the redemption proceeds to them prior to the commencement of the liquidation.

When a corporate borrower faces financial difficulties, there are a variety of enforcement, restructuring and insolvency options available to creditors. From a creditor’s perspective, the choice of procedure will depend on whether the borrower has granted security. If security has been granted over the shares or the assets and undertakings of a Cayman Islands incorporated company pursuant to a Cayman Islands law governed security document, the most appropriate enforcement choice for any secured creditor may be receivership.

Chapter 15 of the Bankruptcy Code provides a mechanism for United States cooperation and coordination with insolvency proceedings abroad, often affording foreign debtors wide-ranging relief and expansive rights through the United States Bankruptcy Court system. Not all proceedings in foreign jurisdictions are eligible — in order to be so, a proceeding must constitute a “foreign proceeding” under the Bankruptcy Code.

On 11 November 2022, the Grand Court of the Cayman Islands heard the first petition to appoint restructuring officers under the new Cayman Islands restructuring regime that came into force on 31 August 2022.

The following briefing provides a round-up of the Cayman legal and regulatory developments during the third quarter of 2022 that may be of interest to funds clients. We are pleased to note that there is nothing critical or requiring immediate action at this time.

Summary of recent legal and regulatory developments

Introduction