The Grand Court of the Cayman Islands has recently ruled In the Matter of Formation Group (Cayman) Fund I, LP (Formation) ¹ that it is possible to bring a just and equitable petition to wind-up an exempted limited partnership (ELP) in its own name, as opposed to that of the general partner (GP). This decision contradicts aspects of Justice Parker's judgment In The Matter of Padma Fund LP (Padma). ² In this update, we consider these conflicting first instance decisions. 

In two relatively recent but unrelated decisions, the Eastern Caribbean Court of Appeal has provided helpful guidance in relation to how the Court ought to deal with an application for the appointment of a liquidator in circumstances where the company asserts a cross-claim in an amount exceeding the applicant's debt.

Introduction

I. Introduction

A Cayman segregated portfolio company, Performance Insurance Company SPC, was placed into official liquidation. The joint liquidators' appointment extended to all of the underlying segregated portfolios (SPs), some of which were solvent and others insolvent. Two of the solvent SPs applied to the Grand Court of the Cayman Islands seeking the appointment of an additional liquidator of the company to separately represent the interests of those solvent SPs on the basis that the original liquidators were conflicted in administering both the solvent and insolvent SPs.

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Two recent decisions by U.S. District Courts have rejected attempts to include nonconsensual third party releases in chapter 11 reorganization plans. These rulings suggest third party releases may be facing increasing push back from the courts.

In an ex parte on short notice application, the Cayman Islands Grand Court considered the four hurdles that must be overcome for the appointment of joint provisional liquidators (JPLs).

The application was brought by an individual investor in Seahawk China Dynamic Fund (the Applicant and the Company). The Applicant submitted that he became aware of dishonest conduct on the part of Hao Liang (Mr Liang) who held all of the management shares in the Company.

In a recent decision,¹ the Grand Court of the Cayman Islands considered the approach the Court will take when reviewing official liquidators' fees, the extent to which the Wednesbury reasonableness test is relevant and the need to file sufficient evidence in advance of the fee approval application hearing.

The BVI Registrar of Corporate Affairs (the Registrar) maintains a Register of Companies (the Register) which records the name of each company incorporated or continued under the BVI Business Companies Act, 2004 (as amended) (the Act).

This guide examines the procedures by which the name of a company may be struck off, or restored to, the Register under the Act.

What is strike off?

This past year was marked by extraordinary deal activity. Record breaking M&A activity drove record breaking private credit activity. Private equity M&A activity was at a substantial high, with over 8,500 deals worth $2.1 trillion, a 60% increase over 2020. Not surprisingly, in this environment, defaults were at all-time lows. The Proskauer Private Credit Default tracker showed an active default rate of approximately 1% at the end of 2021, compared to 3.6% in 2020.