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. |
While section 503(b)(9) claims deserve priority payment over general unsecured claims, they do not provide a basis for stripping a debtor’s defenses in determining the allowed amount of a section 503(b)(9) claim.
Note: Pepper Hamilton LLP serves as co-counsel to the Official Committee of Unsecured Creditors (the Committee) in the ADI case. The views expressed herein are solely those of the authors and not of the Committee.
Chapter 15 of the Bankruptcy Code provides mechanisms for dealing with cases of cross-border insolvency. On Oct. 6, 2014, the U.S. Supreme Court, in Jaffé v. Samsung Electronics Co., Ltd., denied review of a decision of the U.S. Court of Appeals for the Fourth Circuit, upholding a bankruptcy court’s determination that a foreign debtor in a Chapter 15 case could not terminate its intellectual property licenses under German law, where such action would deprive the licensees of the debtor’s U.S.
The Bankruptcy Appellate Panel for the Sixth Circuit (BAP) recently held that a mortgagee that held a collateral assignment of rents on property in which the debtor had no equity was not adequately protected by cash collateral orders entered by the bankruptcy court that granted the lender a "replacement lien" on post-petition rents.