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. |
The Facts
The case concerned an application made by the Liquidators of a BVI incorporated company, Peak Hotels and Resorts Limited ("Peak"). The application was intended to determine the effectiveness of a charge granted by Peak to Candey Limited, Peak's former solicitor.
Peak was the holding company of a joint venture vehicle that became the subject of lengthy international litigation proceedings following the breakdown of relations between the joint venture partners and shareholders. Candey acted for peak in the litigation.
The High Court held that "final determination" signifies the very last stage of any proceedings, without the chance to appeal. Sberbank were therefore still bound by their undertaking to take no further steps in an arbitration against the Company.