It’s been a hard year for cryptocurrency. The values of most cryptocurrencies, including major coins such as Bitcoin and Ethereum, have continued to tumble. In fact, the price of one stablecoin, which is a form of cryptocurrency tied to another currency, commodity or financial instrument, de-pegged from its cryptocurrency token and entered into a downward spiral. Ultimately, the stablecoin and the crypto token it was pegged to collapsed, erasing $18 billion of value with it.
Overview
In a recent decision of the Grand Court of the Cayman Islands (the “Court”) concerning a supervision order in respect of a Cayman company in voluntary liquidation, Kawaley J considered the settled principles in a solvent Cayman Islands liquidation involving a dispute as to the identity of the official liquidators to be appointed.
The Proceeding
Executive Summary
Where multiple Cayman Islands entities in the same corporate structure become subject to insolvency proceedings (e.g. Cayman Islands master/ feeder fund structures), the Cayman Islands Courts will typically seek to appoint the same liquidators at each level where such entities share similarities in circumstances. Doing so typically aligns with the Overriding Objective of the Court to deal with matters economically and efficiently, and in the context of a liquidation, helps protect the interests of stakeholders in the liquidation.
Legislative reforms to Part V of the Cayman Islands Companies Act will shortly be coming into force which will, amongst other things, introduce a new restructuring officer regime available to certain debtors in financial distress.
Global Perspectives on Insolvency, Restructuring & Dispute Resolution
As primarily offshore lawyers, we speak on a daily basis with onshore counsel, banks, asset managers, trustees, corporates, insolvency practitioners and individuals around the world. Those conversations give our Global Insolvency & Dispute Resolution Practice Group a unique perspective on the different market trends and their regional impact in 2022.
The doctrine of equitable mootness is in the news again. The Supreme Court recently denied a cert. petition in a case where the petitioner wanted the doctrine ruled unconstitutional. KK-PB Financial LLC v. 160 Royal Palm LLC, Case No. 21-1197, 2021 WL 7247541 (petition), 2022 WL 1914118, (denying certiorari).
When a Cayman Islands company is in official liquidation, no proceedings or claims can be commenced against the company without the Cayman Court's permission. This requirement serves as a safeguard for the liquidation estate of the company in liquidation from being unnecessarily depleted at the expense of stakeholders of the liquidation.
On 26 April 2022, Chief Justice Smellie QC in Re Premier Assurance Group SPC Ltd. (in Official Liquidation) sanctioned a decision by the joint official liquidators (“JOLs”) of Premier Assurance Group SPC Ltd (in Official Liquidation) (the “Company”) to return (or procure the return of) certain payments held by or on behalf of the Company referable to one of its segregated portfolios, Premier Assurance Segregated Portfolio (“PASP”), to the respective payors on the basis that such sums were paid by mistake.
We have recently experienced an increase in mandates concerning disputes between shareholders and the Board of a Cayman company, which in many cases, leads to a shareholder applying to appoint provisional liquidators over the Company on a just and equitable basis. Therefore, we considered it important to remind those considering this remedy of the evidentiary hurdles they need to overcome to exercise it successfully.
In the world of cryptocurrency, exchange platforms act as intermediaries allowing investors to buy and sell assets while making money through commissions and transaction fees. Any assets purchased may be held in either non-custodial or custodial wallets. If a customer chooses a custodial wallet, the platform holds and manages the assets through a private key, which is a string of characters that serves as a password. If a key is lost or forgotten, it may be impossible to recover, resulting in the permanent loss of the asset.