When a Cayman Islands company (CayCo) goes into official liquidation, various antecedent transactions entered into in the lead up to that liquidation may be set aside, thereby allowing the recovery of assets of the CayCo to maximise the return to its stakeholders. This snapshot sets out a summary of challenges that may be made to antecedent transactions in the Cayman Islands. These may also apply to Limited Liability Companies, Partnerships, Exempted Limited Partnerships and, in certain circumstances, to foreign companies, but this snapshot focuses on CayCos.
Introduction
The Grand Court has recently provided helpful clarification as to the appropriate test to be applied when a dispute arises over the identity of the insolvency practitioners proposed to be appointed by a creditor or the company. In Global Fidelity Bank Ltd (in Voluntary Liquidation)[1] the Court confirmed the 3-stage test for determining independence and that in applying the test, significant weight should be afforded to the views of the creditors.
Background
Mr Justice Snowden’s recent judgment sanctioning the Virgin Active restructuring plans is significant for several reasons. Not only is it the first judgment to consider the cram down power of the 2006 Companies Act, but it is only the third instance that the cross-class cram down mechanism has been used. It is also the first time it has been used to cram down classes of dissenting landlords.
A recent matter which came before a strong Court of Appeal panel demonstrates that the BVI Court will continue to come to the aid of creditors pursuing unpaid debts and that they should not necessarily be deterred from pursuing a debt in the BVI even if the security over the debt is in issue.