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).
On the 22nd of March, the Federal Government announced a suite of temporary changes to insolvency laws to help struggling businesses dealing with the economic fallout of the coronavirus.1 These changes have been designed to act as a ‘safety net’, minimising the threat of actions that could unnecessarily push businesses into insolvency and, instead, allowing them to continue trading.
Changes to Demands from Creditors
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. |
"Ipso facto" amendments to the Corporations Act - what does this mean and what impact does it have on your contracts from 1 July 2018?
Overview
Commercial contracts commonly include a term which permits one party to exercise certain contractual rights (including the right to terminate) if the other party is either insolvent or at the risk of becoming insolvent. Such clauses are commonly called “ipso facto” clauses.