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.

Summary

Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities.

Case Law Consensus

Case law consensus is that such activities must exist on the petition filing date. That means a debtor cannot utilize Subchapter V when:

• business assets are fully-liquidated;
• unpaid debts are the only remnant of the failed business; and
• prospects for resuming such activities are nil.

So . . . here’s the question: Is that the right eligibility standard?

I say, “No.”

A Hypothetical

前言

众所周知，近年来全球经济形势在新冠疫情的阴影下日趋严峻，各行各业均受到了不同程度的负面影响。这种影响传导至PE/VC行业，就演变成“退出难” 问题。被投企业无法上市、业绩低迷、没人接盘……不得已，投资机构们开始打起了“清算”的主意，趁着投资本金还没亏完，能捞回来一点是一点。于是，机构们纷纷向被投企业主张“优先清算权”。关于优先清算权的法律效力，此前的主流观点曾认为《公司法》第186条第二款并不允许有限责任公司自由约定清算剩余财产分配事项，但随着《民法典》的立法进程以及颁布、实施，近年来的司法判例却大多认为《公司法》第186条第二款并非效力性强制性规定，因而支持优先清算权的法律效力。本文拟对几个典型判例进行介绍，以此给PE/VC行业人士提供有益参考。

如系争投资协议项下的“优先清算权”条款约定目标公司在分别支付法定的优于股东之间分配的款项后，部分股东优先于其他股东取得优先分配的，则该股 东内部对于分配顺序进行的约定并不违反《公司法》规定。

案例1

林宇与北京北科创新投资中心（有限合伙）股权转让纠纷案

【(2019)京03民终6335号】

基本事实

过去三年中，受新冠疫情影响，大量企业面临无法清偿到期债务、资不抵债或者明显缺乏清偿能力的困境，法院受理破产清算案件的数量直线上升。最近，笔者也作为破产管理人的一员参与了一起有限合伙企业的破产清算案件，引发了笔者对于有限合伙企业及其普通合伙人共同承担合伙企业债务过程中破产的先后顺序的思考。本篇文章仅浅论普通合伙人因承担有限合伙企业对外债务的连带责任而被申请破产的情形，其因自身债务而进入破产清算程序的情况暂且不论。

• 案情简介

公司A为有限合伙企业B的唯一普通合伙人，现有B的债权人C要求A对B的对外债务承担连带责任，但A无力偿还，故C向法院申请对A进行破产清算，法院裁定受理并指定笔者所在单位作为A的破产管理人，而笔者在履行管理人职务的过程中，发现C并没有同步申请B破产，且B对外存在或有应收账款，如能悉数收回，且足以偿还对C的债务，则A可以免于被申请破产清算。此外，如A被宣告破产，则B也须及时推选或委任新的普通合伙人，否则B将因仅剩有限合伙人而陷入需要解散的境地。

在此情形下，C仅向法院申请对A进行破产清算是否合理引起了笔者的疑问。

A decision which insolvency practitioners will welcome in, Cathro, in the matter of Cubic Interiors NSW Pty Ltd (In Liq) [2023] FCA 694, the Federal Court clarified that s588FL of the Corporations Act 2001 (Cth) (the Act) does not cover security interests granted by a security agreement made after the “critical time” as defined in s588FL(7) of the Act.

In Vincent Cold Storage Pty Ltd v Centuria Property Funds No 2 Limited (No 2) [2023] VSC 314, the Deed Administrator sought section 444F orders to restrain the property owner from retaking premises leased by Vincent Cold Storage in administration and was unsuccessful.

Key takeaways

On 8 March 2023, the Grand Court of the Cayman Islands appointed Joint Provisional Liquidators (“JPLs”) over Atom Holdings (the “Company”), a Cayman incorporated holding company for the Atom Group, which operated a cryptocurrency exchange via an online platform known as AAX (Atom Asset Exchange).

The Royal Court has recently handed down the final decision in the matter of Eagle Holdings Limited (in compulsory liquidation).[1] In this decision, the Royal Court of Guernsey provided guidance and assistance to the joint liquidators regarding a distribution of surplus funds.

Understanding whether a company is insolvent, and the date of insolvency, is essential for directors and accountants who advise companies, as well as liquidators and other parties bringing insolvency-based claims. In understanding these issues, the analysis may need to go beyond establishing present-day liquidity – for example, what impact do long term-debts have on a company’s solvency and how are they used to prove insolvency? Which debts are relevant to the cashflow test? Whether a company is ‘able to pay all its debts’ as and when they become ‘due and payable’?

The arrangements in Israel’s Insolvency and Economic Rehabilitation Law, enacted in 2018, include a series of special characteristics that must be taken into account when engaging with an Israeli corporation.

The relatively new law incorporates various rulings from previous years, and the legal practice deriving from it is still evolving. Thus, some uncertainty still exists regarding how the courts are likely to implement some of the arrangements prescribed in the law.