With the rising popularity of alternative dispute resolution globally (including in insolvency related cases), it is important to take stock of where the Cayman Islands currently stands (as a leading jurisdiction in cross-border insolvency and restructuring) on the use of mediation in this context.

We have published a series of articles dealing with directors’ duties in the zone of insolvency.

On 8 March 2023, the Grand Court of the Cayman Islands appointed Joint Provisional Liquidators (“JPLs”) over Atom Holdings (the “Company”), a Cayman incorporated holding company for the Atom Group, which operated a cryptocurrency exchange via an online platform known as AAX (Atom Asset Exchange).

With a marked increase in large-scale cross-border insolvency and restructuring proceedings in the Cayman Islands and elsewhere, there is a greater focus on principles of comity and co-operation between courts and collaboration between officeholders.

On 24 June 2022, the Honourable Mr Justice Harris (of the High Court of Hong Kong Special Administrative Region) granted assistance to Cayman Islands appointed Joint Provisional Liquidators (the “JPLs”) of Seahawk China Dynamic Fund, a solvent company incorporated in the Cayman Islands (the “Company”). Harris J ruled that the JPLs have the power to act as agents of the Company in Hong Kong. Reasons were delivered on 4 July 2022.

In the recent decision of Evergreen International Holdings Limited, delivered on 11 January 2022, the Grand Court of the Cayman Islands made an order for the immediate winding up of a company notwithstanding the company’s cross-applications for an adjournment of the winding up petition and the appointment of “light-touch” provisional liquidators for restructuring purposes. The Court dismissed the company’s cross-applications on the basis that there was no credible evidence which supported the company’s assertion that a viable restructuring was imminent. 

One difficulty encountered by creditors and trustees in bankruptcy is the use of one or more aliases by a bankrupt. Whether it is an innocent use of a nickname or an attempt to conceal one's identity, the use of an alias can often create problems for creditors seeking to pursue debts and for trustees seeking to recover assets held by a bankrupt.

How does it happen?

As concerns about illegal phoenix activity continue to mount, it is worth remembering that the Corporations Act gives liquidators and provisional liquidators a powerful remedy to search and seize property or books of the company if it appears to the Court that the conduct of the liquidation is being prevented or delayed.

When a person is declared a bankrupt, certain liberties are taken away from that person. One restriction includes a prohibition against travelling overseas unless the approval has been given by the bankrupt's trustee in bankruptcy. This issue was recently considered by the Federal Court in Moltoni v Macks as Trustee of the Bankrupt Estate of Moltoni (No 2) [2020] FCA 792, which involved the Federal Court's review of the trustee's initial refusal of an application by a bankrupt, Mr Moltoni, to travel to and reside in the United Kingdom.

What makes a contract an unprofitable contract which can be disclaimed by a trustee in bankruptcy without the leave of the Court under section 133(5A) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act)? Can a litigation funding agreement be considered an unprofitable contract when the agreement provides for a significant funder's premium or charge of 80% (85% in the case of an appeal)?