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. |
Directors should seek advice from in-house or external legal professionals whenever executing documents, even if they believe that they understand the consequences of what they are signing. They should also record their decision-making process to ensure that they comply with the Companies (Miscellaneous Reporting) Regulations 2018. Wessely v White serves as a timely warning in this regard.(1)
The High Court has granted three insolvent Cayman companies (each in liquidation) a worldwide freezing order in support of proceedings against Mr Terrill, an individual who operated behind the companies' respective corporate directors as their sole director and shareholder. The court exercised its discretion to grant the injunction despite there being a delay of more than a year between the discovery of suspicious transactions linked to Mr Terrill and a Letter of Request applying for a freezing order being sent by the Cayman court together with the companies' liquidators to the Englis
In Smailes and another v McNally and another[i]the High Court refused the claimant's application for relief from sanctions, finding the claimant's failure in respect of its disclosure obligations under the relevant provisions of the Civil Procedure Rules (CPR 31) amounted to a significant and serious breach of an "unless order".