The following briefing provides a round-up of the Cayman legal and regulatory developments during the third quarter of 2022 that may be of interest to funds clients. We are pleased to note that there is nothing critical or requiring immediate action at this time.
Summary of recent legal and regulatory developments
The recent decision of the UK Supreme Court in BTI 2014 LLC v Sequana SAV & Ors [2022] UKSC 25 has considered the nature of the so-called “creditor duty” and whether directors are required to take into account the interests of creditors when the company is “insolvent, bordering on insolvency, or that an insolvent liquidation or administration is probable.”
The Sequana decision also provides guidance about when the so-called “creditor duty” is engaged.
Background
The UK Supreme Court handed down its decision in BTI v Sequana on 5 October 2022, unanimously dismissing the appeal from the 2019 Court of Appeal decision and confirming how directors duties ought to be applied when a company is in the zone of insolvency. Although decisions of the UK Supreme Court are not binding upon the jurisdictions in which Ogier practises law, it will nevertheless be highly persuasive and influence the approach taken in the offshore jurisdictions that Ogier advises upon.
The approach of the Cayman Grand Court to the terms and timing of the discharge of provisional liquidators taken inIn the Matter of Star International Drilling Ltd may provide a window into what is expected to be a similarly flexible approach to the appointment of restructuring officers.(1)
Introduction
The recent decision of the High Court in Fistonich & Anor v Gibson & Ors [2022] NZHC 1422 considered whether receivers have a right to retain surplus funds to meet the cost of defending actual or forecast claims against the receivers.
Background
The case involves the sale of the business and land associated with Villa Maria winery, which was owned and operated through Villa Maria Estate Ltd and established 60 years ago by Sir George Fistonich. FFWL Ltd was the holding company of Villa Maria Estate Ltd.
Reports last week of the significant increase in corporate insolvencies and voluntary liquidations in England and Wales for Q2 demonstrate the combined impact of government COVID-19 support being withdrawn, soaring energy and fuel costs, and weakening demand – and are being reflected in the nature of the instructions coming into our global jurisdictions from distressed companies across the globe.