In an unprecedented turn of events, two recent proceedings in the Grand Court of the Cayman Islands considered the same complex legal issues just one week apart.

The much-anticipated and welcome reforms to the Cayman Islands restructuring and insolvency legislation will come into force on 31 August 2022.

Global Perspectives on Insolvency, Restructuring & Dispute Resolution 

As primarily offshore lawyers, we speak on a daily basis with onshore counsel, banks, asset managers, trustees, corporates, insolvency practitioners and individuals around the world. Those conversations give our Global Insolvency & Dispute Resolution Practice Group a unique perspective on the different market trends and their regional impact in 2022.

“the new restructuring officer regime and the other amendments to the Companies Act … address certain of the challenging issues previously experienced by practitioners with the restructuring provisional liquidation regime”

Introduction

The Cayman Islands continues to be at the forefront of developments in restructuring and insolvency law in the offshore world and one of the premier jurisdictions of choice to facilitate complex and high-value cross-border restructurings.  

The High Court decision in Re All Star Leisure (Group) Limited (2019), which confirmed the validity of an administration appointment by a qualified floating charge holder (QFCH) out of court hours by CE-Filing, will be welcomed.

The decision accepted that the rules did not currently provide for such an out of hours appointment to take place but it confirmed it was a defect capable of being cured and, perhaps more importantly, the court also stressed the need for an urgent review of the rules so that there is no doubt such an appointment could be made.

In certain circumstances, if a claim is proven, the defendant will be able to offset monies that are due to it from the claimant - this is known as set off.

Here, we cover the basics of set off, including the different types of set off and key points you need to know.

What is set off?

Where the right of set off arises, it can act as a defence to part or the whole of a claim.

In our update this month we take a look at some recent decisions that will be of interest to those involved in insolvency litigation. These include:

Creditor not obliged to take steps in foreign proceedings to preserve security

No duty of care owed for negligent bank reference to undisclosed principal

The Supreme Court has held that a bank which negligently provided a favourable credit reference for one of its customers did not owe a duty of care to an undisclosed principal who acted on that reference.

There has been a series of high profile tenant company voluntary arrangements (CVAs), particularly in the retail and casual dining sectors. Many landlords have been hit by closure of underperforming stores, and by rent cuts on those remaining open. Here we outline ten points for landlords on what CVAs are, how they are entered into and what landlords can do to protect themselves.

What is a CVA?

A CVA is a statutory process, supervised by an insolvency practitioner. It allows a company in financial difficulty to: