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The Cayman Islands Court of Appeal Relieves the Tension between Arbitration Clauses and the Just and Equitable Winding Up Jurisdiction

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.

Cayman Islands, Arbitration & ADR, Insolvency & Restructuring, Litigation, Ogier, Arbitration clause
Court of Appeal validates test under Section 99 of Companies Law

Legal issue of principle
Facts
First-instance decision
Court of Appeal decision
Decision's relevance

Cayman Islands, Insolvency & Restructuring, Ogier
Court of Appeal validates test under Section 99 of Companies Law

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).

Cayman Islands, Company & Commercial, Insolvency & Restructuring, Litigation, Private Client & Offshore Services, Ogier
Cayman Islands Court of Appeal validates test under section 99 of the Companies Law

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

Cayman Islands, Company & Commercial, Insolvency & Restructuring, Litigation, Ogier
Bankruptcy. Discovery. Sanctions. Bankruptcy court sanctions attorney for failing to make reasonable efforts to obtain discovery materials held outside the U.S. by incarcerated debtor's agents and attorneys.

In re Markus, 607 B.R. 379 (Bankr. S.D.N.Y. 2019) [click for opinion]  

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Bankruptcy, Debtor, Title 11 of the US Code, United States bankruptcy court
Restructuring and Corporate Recovery Jurisdiction Guide: Cayman

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.

British Virgin Islands, Cayman Islands, Insolvency & Restructuring, Litigation, Ogier
U.S.: Second Circuit affirms bankruptcy and district court decisions to deny motion to compel arbitration given the conflict between arbitration and the Bankruptcy Code.

Anderson v. Credit One Bank, N.A. (In re Anderson), 884 F.3d 382 (2d Cir. 2018) [click for opinion]

USA, Arbitration & ADR, Banking, Insolvency & Restructuring, Litigation, Baker McKenzie
Personal jurisdiction

Tenth Circuit holds that Canadian nationals who conspire to commit a breach of fiduciary duty against a Delaware corporation operating exclusively in Oklahoma are subject to personal jurisdiction in Oklahoma despite their lack of physical contact with the state.  Canadian law firm alleged to have assisted the conspirators is not, however, subject to personal jurisdiction.

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Fiduciary, Personal jurisdiction, Delaware General Corporation Law, Tenth Circuit
District court holds that a bankruptcy action’s automatic stay, and the bankruptcy's court's power to enjoin violations of the stay, applied extraterritorially

Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Secs., 474 B.R. 76 (2012)

The trustee for the Securities Investor Protection Act ("SIPA") liquidation of Bernard L. Madoff Investment Securities LLC ("BLMIS") filed a complaint in the bankruptcy court against Maxam Absolute Return Fund Ltd. ("Maxam"), seeking the return of about $100 million distributed to Maxam by BLMIS.  Maxam answered the complaint and then sued the trustee in the Cayman Islands seeking a declaration that it was not required to return the money. 

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Bankruptcy, Debtor, Injunction, Extraterritoriality
Bankruptcy court declines to accord comity to reorganization plan approved by Mexican court

In re Vitro, S.A.B. de C.V., No. 11-33335-HDH-15 (Bankr. N.D. Tex. June 13, 2012)

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Bankruptcy, Debtor, Comity, Title 11 of the US Code