In certain circumstances the official liquidator of a Cayman company may be able to take action to recover assets which have been transferred in the run up to the company's insolvency. It is important for those concerned with the affairs of a Cayman company in the twilight of insolvency to be aware of the statutory powers available to the official liquidator and the Grand Court in the Cayman Islands.
Voidable preferences
The Grand Court has handed down an instructive judgment appointing "light-touch" provisional liquidators over Midway Resources International ("Midway"), a pan-African focused upstream oil and gas company, incorporated in the Cayman Islands. The judgment of Segal J will be of particular interest to companies considering the appointment of provisional liquidators intended to work alongside the board of directors to promote a restructuring plan, under section 104(3) of the Companies Act (2021 Revision) (the "Act").
As year end approaches, it is time to start planning the liquidation of Cayman Islands entities that have reached the end of their life cycle to ensure that unnecessary fees are not incurred.
In the latest instalment in the ongoing litigation between Herald and Primeo,[1] the Grand Court of the Cayman Islands has considered how liquidators of a Cayman fund may adjust the fund’s historic NAVs (and thereby alter the respective amounts to be distributed to the fund’s shareholders) in circumstances where those NAVs were misstated due to fraud or default and where calcu
This guide outlines the procedure for a voluntary liquidation of a solvent Cayman Islands exempted company and the duties of its liquidator. It also sets out the process for striking an exempted company off the Register of Companies in the Cayman Islands.
Voluntary liquidation
A Cayman Islands exempted company can be wound up voluntarily:
Insolvency law in the Cayman Islands is principally regulated by the Companies Law (2013) and the Companies Winding Up Rules 2008, which are supplemented by a wide body of case law. The following guidance is a summary only.
Under Cayman law, a company may be wound up on the basis of insolvency if it cannot pay its debts as they fall due. A company is treated as unable to pay its debts if:
In Vento and Others v Westminster Hope & Turnberry, Ltd (unreported, 25 November 2015) The Honourable Anthony Smellie, C.J., sitting in the Financial Services Division of the Grand Court clarified the grounds on which judgment creditors may seek to use charging orders to enforce judgment debts. Readers will note that typically charging orders are made in respect of immoveable property (eg.
The High Court has granted three insolvent Cayman companies (each in liquidation) a worldwide freezing order in support of proceedings against Mr Terrill, an individual who operated behind the companies' respective corporate directors as their sole director and shareholder. The court exercised its discretion to grant the injunction despite there being a delay of more than a year between the discovery of suspicious transactions linked to Mr Terrill and a Letter of Request applying for a freezing order being sent by the Cayman court together with the companies' liquidators to the Englis
Loss of substratum (or reason for existence)
CAYMAN ISLANDS