Attached is the April 2022 publication of our Technical Brief for Investment Funds, a newsletter developed by the Loeb Smith Cayman Islands Investment Funds Technical Team. This Technical Brief covers, among other thing, a number of recent Cayman case law authorities which will have an impact on the practical application of Cayman Islands' law:

Introduction

The proposed introduction of a corporate restructuring regime in the Cayman Islands is a welcome development and is considered by many to be long overdue. Presently, Cayman Islands law does not provide for any formal corporate restructuring process; a position which can be contrasted with, for example, the United Kingdom and the United States whose respective “administration” and “Chapter 11 bankruptcy” processes have been available for many years.

Current Cayman Islands law

The Grand Court in the Cayman Islands recently confirmed the appropriate insolvency test to be applied pursuant to section 224 of the Companies Act (2021 Revision) (“Companies Act”) in respect of a Cayman Islands segregated portfolio company (“SPC”), in a judgment delivered in respect of Obelisk Global Fund SPC (“Fund”) and Obelisk Global Focus Fund (“SP1”).

1. Segregated portfolio companies

Voluntary liquidations generally

Commencing the voluntary winding-up of a mutual fund is deceptively easy but, as soon as it is contemplated, the Fund Manager's role and responsibilities change in subtle but very important ways.

Voluntary liquidations generally

There are two principal routes to voluntarily dissolving a Cayman Islands company after the conclusion of its operations. Dissolution can be achieved either through (i) voluntary liquidation, or (ii) a strike-off. The dissolution will mean that the company is removed from the Register maintained by the Registrar of Companies in the Cayman Islands and cease to exist ultimately.

A statutory demand is a formal demand for payment of a debt made by a creditor to a debtor. It may be used as the basis for an application for a petition to wind up a Cayman company.

Service and content of Statutory Demand

The Companies Winding up Rules 2008 (as amended) provide guidance as to the form and content of a statutory demand as well as the mode of service within the Cayman Islands.

A statutory demand should be in the format of CWR Form 1 and must be signed by:

Voluntary liquidations generally

As the conclusion of 2018 approaches, clients should give some thought to whether or not they have Cayman entities which they wish to liquidate prior to the end of 2018 for, among other things, the purpose of avoiding annual government registration fees due in January 2019. A voluntary liquidator of a Cayman company or exempted limited partnership (ELP) is required to hold the final general meeting for that company or file the final dissolution notice for that ELP on or before 31 January 2019.

Voluntary liquidations generally

As the conclusion of 2019 approaches, clients should give some thought to whether or not they have Cayman entities which they are no longer using and wish to liquidate prior to the end of 2019 in order to, among other things, avoid annual government registration fees due in January 2020. A voluntary liquidator of a Cayman company or exempted limited partnership (ELP) is required to hold the final general meeting for that company or file the final dissolution notice for that ELP on or before 31 January 2020.