The COVID-19 pandemic is an unprecedented world health crisis which has undoubtedly caused significant disruption to the growth, function and stability of the global economy. As a result, many corporations have experienced and will continue to experience a significant reduction in their commercial activity in the near term.
In another recent decision in the cross-border insolvency proceedings concerning Cayman-based Caledonian Bank, the Supreme Court of the Commonwealth of the Bahamas acceded to the petition for Caledonian Bank Limited (In Liquidation Under Supervision of the Grand Court of the Cayman Islands) to be wound up as a foreign company pursuant to Section 185(d)(ii) of the Companies Winding-up Amendment Act 2011, thereby exercising its jurisdiction for ancillary winding-up proceedings to be entered into.
The Supreme Court of the Commonwealth of the Bahamas made an ancillary winding up order against Caledonian Bank Limited, a company registered in the Cayman Islands, under the Companies Winding-Up Amendment Act 2011.
In the past year, The Bahamas Supreme Court dealt with what is known to be its first case involving an insolvent trust. This is novel area of the law in The Bahamas and other common law jurisdictions where there is no statutory regime to deal with the issue.
When your business first begins to have financial difficulties, you should take action quickly to increase its stability. You have options such as refinancing and consolidating, or you can look to insolvency or liquidation proceedings.
First, assess your business's true financial situation. You may need to review the bookkeeping or talk to an accountant about your profits, losses, and debts. Be realistic about how much you can improve the finances and in how long of a time period. If you are already having trouble paying the bills, then you need to act fast.
The world continues to get smaller as a result of globalisation and cross-border insolvency issues are now commonplace. Whilst a debtor company may be subject to insolvency proceedings in one part of the world, its assets may be located in another. Moreover, creditors of the debtor company may be local and foreign, and therefore outside the territorial reach of the court at the seat of the insolvency.
In In re O’Reilly, 598 B.R. 784 (Bankr. W.D. Pa. 2019), the U.S. Bankruptcy Court for the Western District of Pennsylvania denied the petition of a foreign bankruptcy trustee for recognition under chapter 15 of the Bankruptcy Code of a debtor’s Bahamian bankruptcy case. Although the Bahamian bankruptcy was otherwise eligible for chapter 15 recognition, the U.S.
An important decision was issued last week by the Bankruptcy Court for the District of Delaware in favor of Squire Patton Boggs’ client CCA Bahamas, Inc. (“CCA Bahamas”). The decision provides guidance on when U.S. bankruptcy courts should dismiss cases filed by foreign debtors. See In re Northshore Mainland Services, Inc., et al., Case No. 15-11402 (KJC).