In a landmark post-Rubin v Eurofinance[1] ruling, the Grand Court of the Cayman Islands has granted common law recognition and assistance to liquidators appointed by the High Court of Hong Kong over an exempted Cayman Islands incorporated company.

The illegality defence (which aims to prevent a party benefiting from its illegal conduct via legal claims) has been the subject of considerable judicial analysis in commonwealth jurisdictions in recent years.

Q4 2020 and Q1 2021 saw some significant developments in offshore restructuring, insolvency and corporate recovery, with the passage of new legislation and the handing down of judgments providing welcome clarification on laws relevant to practitioners in this area.

Over the past two or three years, we have seen an increasing number of cases where a client holds and wishes to sell or transfer shares in a Cayman Islands company which is in liquidation, or is seeking to purchase shares in such a company from another party.  In those circumstances, the transfer of the shares would be void absent the validation of the Grand Court of the Cayman Islands, as a result of section 99 of the Companies Law (2013 Revision) ("Section 99").  Section 99 is in the following terms:

The Grand Court of the Cayman Islands has provided further helpful guidance to insolvency practitioners as to the circumstances in which leave will be granted to commence or continue proceedings against a company in liquidation. Adenium Energy Capital Limited (in official liquidation) (Adenium) is the latest in a line of cases in the Cayman Islands in which leave has been sought to commence proceedings under s 97(1) of the Companies Act against a Cayman Islands-incorporated company in liquidation.

The Grand Court of the Cayman Islands (the "Grand Court") recently considered the statutory moratorium against commencing proceedings against a Cayman Islands company which has been placed into liquidation. In the case of BDO Cayman Ltd. and BDO Trinity Ltd. v Ardent Harmony Fund Inc.

Introduction

Introduction

On 22 February 2022, Doyle J made a winding up order and appointed joint official liquidators in respect of GTI Holdings Limited (Company), a company incorporated in the Cayman Islands. The winding up order was unopposed and Doyle J was satisfied that the company was insolvent. Nevertheless, in a judgment dated 15 March 2022,  Doyle J articulated the reasons for his hesitancy in making that winding up order.

Background

Introduction

It is trite law that where a petition debt is disputed in good faith and on substantial grounds, the ordinary practice of the Court is to dismiss or strike out the winding up petition. However, this principle is more easily applied in theory than in practice. As a result, the Grand Court of the Cayman Islands has observed recently that "It is remarkable how much case law has been generated in relation to a legal test which has essentially been settled for many years" (Re Sky Solar Holdings Ltd).

National interests play a distinct part in application of the UNCITRAL model law on cross-border insolvency.  

The Model Law