A warm welcome to the Summer edition of Conyers Coverage. The whirlwind that is the Cayman Islands (re)insurance industry continues to blow with gusto! To keep you updated on recent developments, we include various items from our Insurance, Regulatory and Litigation teams, we ponder the possibilities and implications for the Cayman Islands in potentially securing Qualified Jurisdiction status with the NAIC and lots more beyond. We think there’s something for everyone in our latest edition so please dig in.

To NAIC or Not to NAIC?

On August 31, 2022, significant amendments to Part V of the Cayman Islands Companies Act (“Act”) took effect to revamp the Cayman Islands restructuring regime. These amendments introduced the new role of a court-appointed “Restructuring Officer” and a dedicated “Restructuring Petition.” The Cayman Islands restructuring officer regime (“RO Regime”) shares certain features with the Chapter 11 bankruptcy procedure in the US and Canada’s Companies’ Creditors Arrangement Act.

In Harrington v. Purdue Pharma L.P., 144 S. Ct. 2071 (2024) (“Purdue”), the Supreme Court held that the Bankruptcy Code does not authorize nonconsensual releases of nondebtors as part of a chapter 11 plan. The Court narrowly read the Code’s language, providing that a plan may “include any other appropriate provision not inconsistent with the applicable provisions of this title,” 11 U.S.C.

Although there are occasions when formal insolvency proceedings are unavoidable, there are many cases where a consensual, out-of-court approach is more appropriate and desirable.

We are often engaged to assist creditors, directors and other stakeholders with negotiating standstill agreements or restructuring support agreements to give breathing space to put new terms in place and allow the relevant corporate entity (or group) to continue as a going concern.

We have previouslyblogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C. §§ 544, 547, 548.

We have previously blogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C. §§ 544, 547, 548. Section 546(e), however, bars avoiding certain transfers, including a “settlement payment . . . made by or to (or for the benefit of) . . . a financial institution [or] a transfer made by or to (or for the benefit of) a . . . financial institution . . . in connection with a securities contract.” 11 U.S.C. § 546(e).

Federal law assigns to U.S. district courts original jurisdiction over all cases under Title 11 (the Bankruptcy Code) and all civil proceedings arising under Title 11 or arising in or relating to Title 11. See 28 U.S.C. § 1334(a), (b). Federal law permits each U.S. district court to refer such cases and civil proceedings to bankruptcy courts, and district courts generally do so. But bankruptcy courts, unlike district courts, are not courts under Article III of the Constitution, and are therefore constrained in what powers they may constitutionally exercise.

The new restructuring regime in the Cayman Islands distinguishing between winding‑up and recovery gives multinationals another option, say Alex Davies and Spencer Vickers

Recent amendments to part V of the Cayman Islands Companies Act have updated the domestic restructuring regime and introduced the new role of a court‑appointed restructuring officer and a dedicated restructuring petition. The Cayman Islands restructuring officer regime shares certain features with the administration regime in the UK and the Chapter 11 bankruptcy procedure in the US.

Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state law. See 11 U.S.C. § 544(b)(1). Thus, for example, if outside of bankruptcy a creditor could avoid a transaction entered by a debtor as a fraudulent transfer, in bankruptcy, the trustee acquires the power to avoid such a transaction.

These continue to be challenging times and we recognize that the need for cross-border advice on insolvency and restructuring matters may be required at short notice. Conyers’ attorneys are insolvency and restructuring experts. We are well-equipped to advise at all stages where financial stability becomes an issue and innovative solutions are required.

The Complications Involved with Cross-Border Restructuring