On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit affirmed the decision of the U.S. Bankruptcy Court for the Southern District of Texas (Isgur, J.) allowing a claim against a solvent debtor for a make-whole premium and post-default interest totaling approximately $387 million. Ultra Petroleum Corp., et al. v.
The following briefing provides a round-up of the Cayman legal and regulatory developments during the third quarter of 2022 that may be of interest to funds clients. We are pleased to note that there is nothing critical or requiring immediate action at this time.
Summary of recent legal and regulatory developments
Do you have Cayman vehicles that you are considering terminating?
If so, you should consider initiating the process now to minimise or eliminate 2020 annual fees. This note contemplates corporate vehicles but similar considerations apply to partnerships.
Termination by voluntary liquidation
In late February 2014, MtGox Co., Ltd (“MtGox”), once the largest bitcoin exchange in the world, suspended all trading on its exchange after internal investigations revealed a loss of approximately 750,000 of its customers’ bitcoins worth nearly $473 million. That loss caused MtGox to become insolvent.
Over the past two or three years, we have seen an increasing number of cases where a client holds and wishes to sell or transfer shares in a Cayman Islands company which is in liquidation, or is seeking to purchase shares in such a company from another party. In those circumstances, the transfer of the shares would be void absent the validation of the Grand Court of the Cayman Islands, as a result of section 99 of the Companies Law (2013 Revision) ("Section 99"). Section 99 is in the following terms:
CASE SNAPSHOT
CASE SNAPSHOT
In a case of first impression, the Fourth Circuit determined that broker commissions shown to be reasonable and customary parts of settling stock sales constitute "settlement payments" and that the payment of margin interest constitutes "margin payments" under section 546(e) of the Bankruptcy Code such that these types of payments are immune from avoidance and recovery by a bankruptcy trustee.
FACTUAL AND PROCEDURAL BACKGROUND