In a comprehensive judgment published on 23 April 2020, the Cayman Islands Court of Appeal, comprising Moses JA, Martin JA and Rix JA, has provided welcome clarification of the interplay between a contractual agreement to arbitrate disputes arising between shareholders and the exclusive jurisdiction of the Court to determine whether a company should be wound up on the just and equitable ground.
The Court of Appeal has provided much needed clarification of the test for validating certain transactions by companies that are subject to a winding-up petition, pursuant to Section 99 of the Companies Law (2020 Revision).
The Cayman Islands Court of Appeal has provided much needed clarification of the test for validating certain transactions by companies that are subject to a winding up petition, pursuant to section 99 of the Companies Law (2020 Revision) (the "Companies Law").
The Legal Issue of Principle
Domestic Procedures
What are the principal insolvency procedures for companies in your jurisdiction? | Liquidation: voluntary and official. Cayman does not have an equivalent to the English concept of the company administration or to the Chapter 11 process in the United States. Schemes of Arrangement/“Soft Touch Liquidations” allow the company to enter into an agreement with its shareholders and/or creditors. |
As we have recently highlighted and discussed in depth elsewhere in relation to the UKCS (click here), the confidence of North Sea oil & gas contractors is at an all-time low.
Following the Court of Appeal’s decision in Game it is necessary to consider the effect of the court’s decision on the treatment of rents in administration and by analogy liquidation – and the potential consequences of that change.
What types of insolvency does the decision affect?
The Court of Appeal’s decision explicitly states that it is applicable as to the treatment of rents in both administration and liquidation.
What about existing cases?
Michael John Andrew Jervis v Pillar Denton Limited (Game Station) and others [2013] EWHC 2171 (Ch) (“Game”)
Game has come to the courts against the background of two previous High Court decisions on the treatment of lease rents in administration. Recent decisions on this point have arisen out of cases where landlords made claims for rent in the administration of tenant companies.