In CHC Group Ltd ("CHC") the Cayman Islands Grand Court has determined that, in certain circumstances, directors of a company can commence Cayman Islands restructuring provisional liquidation proceedings ("RPL Proceedings") without the need for a shareholders' resolution or authorisation in the company's articles of association. This decision allows greater access by companies to the Cayman Islands restructuring regime by confirming a practical solution to the so-called Emmadart issue.
A Cayman Islands company can be dissolved by the appointment of a liquidator or it can be dissolved without such appointment if the company is struck off the register as a result of an application to the Registrar of Companies for the purpose.
Voluntary liquidation
In circumstances where the company has been active and has substantial assets and liabilities, it is normal and recommended for the company to be liquidated.
A recent decision1 from the Grand Court of the Cayman Islands demonstrates a flexible use of the scheme of arrangement process to achieve a commercial resolution of an application to remove the SPhinX Group's joint official liquidators ("JOLs").
Cayman Islands companies have dominated the restructuring news cycle of late for a variety of reasons, including recent judicial commentary as to the effect of obtaining recognition under Chapter 15 of the U.S. Bankruptcy Code.
In the recent judgment In the Matter of GTI Holdings Limited delivered on 15 March 20221 , the Cayman Islands Grand Court reiterated the importance of principles of comity in cross-border insolvency matters and the central function of the place of incorporation.
A copy of the full judgment is available here.
Background
In the October 2021 edition of IBA Insolvency and Restructuring International, Peter Hayden and Jonathan Moffatt explain recent decisions in the UK and the Cayman Islands on the narrowing of the rule in Prudential and its implications for shareholders and creditors considering litigation.
Introduction
Questions & Answers
The views expressed herein are those of the author and not necessarily the views of FTI Consulting, Inc, its management, its subsidiaries, its affiliates, or its other professionals.
In appointing restructuring provisional liquidators ("RPLs") to the Cayman Islands incorporated company, CW Group Holdings Limited ("CW"), in the face of opposition from a creditor seeking a remedy that may have led to CW's liquidation, the Cayman Islands court has reinforced its reputation in (i) putting company rescue first and (ii) seeking to ensure that returns to creditors are maximised. A significant step has also been taken in applying a more commercial and pragmatic reality to the question of officeholder independence.
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