At the recent Chambers Economic Forum, the Cayman government announced its intention to bring in a much-anticipated new regime governing corporate restructuring by the end of 2020. Until then, with the COVID-19 pandemic pushing many groups into the zone of insolvency, the following considerations remain relevant to structures involving a Cayman entity:

At the recent Chambers Economic Forum, the Cayman government announced its intention to bring in a much-anticipated new regime governing corporate restructuring by the end of 2020. Until then, with the COVID-19 pandemic pushing many groups into the zone of insolvency, the following considerations remain relevant to structures involving a Cayman entity:

Rumours that a company is in the zone of insolvency may create a race to the assets, with potential creditors or interested parties commencing proceedings in an attempt to secure payment from the company before its assets are fully dissipated or tied up in the insolvency process. This can destroy the collective value in the enterprise or scupper a restructuring and result in significant duplicative costs.

Introduction

In the current COVID-19 environment it is likely that there will be more businesses becoming insolvent. Some of those businesses will have an interest in Jersey property. For example as owners of Jersey property or holders of a lease of retail premises situated in the Island. The business may also have locally employed employees to consider.

What is an SPC?
Treatment in insolvency situations
ABC Company (SPC) v J & Co Ltd
Axiom
Additional case law
SPCs and litigation funding
Test for insolvency

Until the Cayman Islands introduces any changes to its corporate insolvency regime, with the COVID pandemic pushing many groups into the zone of insolvency, the following considerations remain relevant to structures involving a Cayman Islands entity:

This briefing first appeared in the June 2020 edition of South Square Digest.

Executive Summary

In February 2020 the British Virgin Islands Commercial Court (the "BVI Court") sanctioned a creditor scheme of arrangement, which was part of a much larger cross boarder restructuring. This scheme of arrangement, which as a creditor scheme was itself rare for the BVI, was preceded by the BVI's first ever "soft touch" provisional liquidation (in linked proceedings), which commenced in December 2018.

Recent werden twee koninklijke besluiten (KB nr. 45 en nr. 46) gepubliceerd waarin enkele bijkomende steunmaatregelen voorzien worden in het kader van de COVID-19-uitbraak. Deze voorzien enerzijds de mogelijkheid voor de opname van voltijds corona-ouderschapsverlof en anderzijds enkele nuttige maatregelen tot herverdelen van de arbeid, waaronder het corona-tijdskrediet, voor ondernemingen in herstructurering of moeilijkheden.

Uitbreiding corona-ouderschapsverlof

On 17 April 2020 the Supreme Court handed down an important interim judgment concerning the pre-pack bankruptcy of Heiploeg. In this judgment, the Supreme Court holds that the rules on the Transfer of Undertakings (as explained further below) do not apply to a restart following bankruptcy. In addition, the Supreme Court holds that the rules on the Transfer of Undertakings do not always apply in the case of a restart that has been prepared by means of a pre-pack. The Supreme Court takes the view that in the pre-pack bankruptcy of Heiploeg these rules do not apply.