I OVERVIEW OF RESTRUCTURING AND INSOLVENCY ACTIVITY

Nine years after the financial crisis, the global economic recovery is somewhat more optimistic than last year, with global GDP growth projected to be 3.5 per cent by 2017, slightly up from last year.2 Fears of another international recession continue as global trade growth remains depressed and emerging market economies lose momentum, with sharp downturns in some emerging economies, especially those that are heavily reliant on commodity producers. The developments in China's economy cloud the stability of the overall global upturn as economic growth is set to head further south, from 6.6 per cent in 2017 to 6.4 per cent by the end of 2018.

While the petitions being filed in the Cayman Islands during 2016 remained identical to the previous year, there were 13 fewer insolvency petitions. There were 46 insolvency petitions in 2016, making up two-thirds of the total petitions filed over the year. This is down from 2015 when insolvency petitions made up a remarkable 84 per cent of the annual total of petitions.3 Nevertheless, the Cayman Islands Monetary Authority (CIMA) continues to combat these uncertain times by introducing robust but market-flexible regulatory, monetary and cooperative initiatives to enhance market confidence and to maintain its reputation as a leading international financial centre.

The US is the largest source of foreign direct investment (US$260 billion, equal to 47 per cent) followed by Hong Kong (US$56 billion), the Netherlands (US$53 billion) and Brazil (US$52 billion). Outward direct investment from the Cayman Islands goes to Luxembourg, the US, Hong Kong, Singapore, the Netherlands and China. The Cayman Islands is the largest holder of US securities in the world (excluding long-term debt held by Chinese and Japanese central banks). Recently, there has been a massive increase in Japanese portfolio investment in the Cayman Islands, from US$574 to US$713 billion over the past year. This is double the portfolio investment from Hong Kong, which stands at US$337 billion and is largely due to special legislation enacted to attract investment funds specifically targeted at Japanese investors.4

The Cayman Islands' banking sector continues to play a major part in the Cayman financial services sector, with 158 banks licensed as of the end of March 2017, with total international (cross-border positions in all currency and domestic positions in foreign currency) assets and liabilities of US$1.15 trillion and US$1.21 trillion, respectively, in June 2016.5 While the majority of these banks are subsidiaries, affiliates and branches of global financial institutions conducting business in the international markets, it is testament to the islands' recognised and robust banking sector that 40 of the world's top 50 banks hold licences in the Cayman Islands.

The 158 banks licensed in the Cayman Islands are categorised into A and B classes, with the former licensed to carry out local as well as international business. There are presently 11 Class A licensed banks in the Cayman Islands, six of which carry out retail services. The remaining banks hold Class B licences and are broadly restricted to offshore transactions with non-residents. We submit that the robustness and relatively regulator-friendly nature of the Cayman banking sector will see an increase in the use of Class B banks. Its flexibility will likely prove to be an attractive, alternative structure to sophisticated high net worth individuals as well as global corporations looking for a tax-efficient method to structure their intra-group financing.

Of the 158 banks licensed in the Cayman Islands, 36 are from Europe, 25 are from the US, 21 are from the Caribbean and Central America, 20 are from Asia and Australia, 16 are from Canada and Mexico, 35 are from South America, and five are from the Middle East and Africa. The volume of cross-border assets and liabilities held by Cayman banks has seen a gradual decline since June 2009, despite a slight increase in 2013. The decline is considered to be attributable to the hangover from the financial crisis impacting on international credit markets, and the contraction of the global economy, in particular in the eurozone, and most notably the emerging European markets that conduct transactions through the UK and the US, who in turn make up the rump of the international banking sector in the Cayman Islands. There has also been a healthy shift from the banking sector to the debt securities and investment funds market because of the relatively high performance of stocks and bonds.

Other parts of the Cayman Islands financial services industry are demonstrating resilience in the face of the new global order of international standards, transparency and heightened regulation. The Cayman Islands continues to be a leading jurisdiction for the incorporation of special purpose vehicles (SPVs) for the global structured finance market, given its tax-neutral status; buyers of debt issued by the SPVs can participate in the knowledge that they will only be taxed in their home jurisdictions. The vast majority of these SPVs are used to purchase loans issued by Wall Street and the European banks that are subsequently traded to other institutional investors.

The success of the Cayman Islands financial services industry is, therefore, the result of a number of factors, including its freedom of investment decisions for hedge fund managers, its tax-neutral status and the knowledge of experienced professional service providers in the Islands. The Cayman Islands' globally renowned legal system has also provided a robust framework to effectively address restructuring or liquidity issues arising from the lingering effects of the credit crisis. The Cayman Islands has a globally recognised and comprehensive, creditor-friendly regime to facilitate domestic and cross-border insolvencies and restructurings, with effective procedural rules in place both for insolvency practitioners and the courts.

‘Light-touch' restructurings by way of the appointment of provisional liquidators in the Cayman Islands continues to be a prominent feature for consideration by interested stakeholders, and we see no immediate signs of this trend abating given the preference by Asian clients to use companies incorporated in the Cayman Islands as their listing vehicle.

In this regard, investors and opportunistic funds continue to keenly examine the Chinese debt burden and the far-reaching impact any market correction is likely to have on the global economy. Chinese regulators and banks have been on the offensive in reining in credit creation in light of the trend seen in 2016 of deteriorating credit quality. With overdue and non-performing loans rising as economic growth moderates, it remains to be seen if China can rein in credit creation without jeopardising its goal of sustaining GDP growth rates at above 6 per cent. Chinese banks are still by far the largest source of funding, facilitating massive lending for investment projects that are driven by the need to generate economic activity and employment.6

II GENERAL INTRODUCTION TO THE RESTRUCTURING AND INSOLVENCY LEGAL FRAMEWORK

i Formal insolvency and restructuring procedures

The Cayman Islands legislative framework does not contain an equivalent regime to the United States Chapter 11 Bankruptcy Code or the United Kingdom's administration restructuring tools to facilitate the rescue of an insolvent company (however, see Section IV as to proposed reforms). As a result, and in order to obtain the benefit of a moratorium against any proceedings continuing or being commenced against a company without leave of the Grand Court, companies tend to utilise the light-touch restructuring tool by seeking to appoint provisional liquidators pursuant to Part V of the Companies Law (2016 Revision) (the Companies Law), specifically Section 104(3), to assist the company in promoting a compromise or arrangement with its creditors. An application under Section 104(3) is usually made by the company on an ex parte basis on the grounds that the company is or is likely to become unable to pay its debts as they fall due and, as mentioned above, the company intends to present a compromise or arrangement to its creditors, most commonly by the promotion of a scheme of arrangement pursuant to Section 86 of the Companies Law. On the appointment of provisional liquidators, the Grand Court will determine which corporate powers will remain with the directors and which will be vested in the provisional liquidators.

The benefit of the light-touch restructuring process is that the appointment of provisional liquidators invokes the statutory moratorium on any proceedings, including winding-up proceedings by a creditor, being brought against the company.

Somewhat surprisingly, the Companies Law in its current state does not specifically provide for a creditor, a contributory or CIMA (in the case of regulated entities) to seek the appointment of provisional liquidators to promote a light-touch restructuring similar to Section 104(3). Instead, to have provisional liquidators appointed, these parties must first demonstrate that there are prima facie grounds to wind up the company, and that the appointment of provisional liquidators is necessary to prevent the actual or threatened dissipation of assets or mismanagement by the company's directors.7 Such an application will ordinarily be inter partes; however, it can be made ex parte if exceptional circumstances can be shown. Given that there is no statutory fetter on the Grand Court's discretion in respect of the functions and powers that may be given to the provisional liquidators, in appropriate circumstances, a ‘traditional' dissipation of assets provisional liquidator should be able to promote a scheme of arrangement or other compromise or arrangement with the company's creditors or members by virtue of the powers extended to official liquidators (which includes provisional liquidators, pursuant to Section 89 of the Companies Law) under Section 110(2) of the Companies Law. This proposition is supported by a number of recent Hong Kong decisions, most notably by the Hong Kong Court of Appeal in the case of Re Legend International Resorts Ltd, where it was held:

The law on the appointment of provisional liquidators at present is contained in section 192 [equivalent to s.104(1) of the Companies Law] and the following sections and it is clear in the wording of those sections that the appointment of a provisional liquidator must be for the purposes of the winding up. Provided that those purposes exist there is no objection to extra powers being given to the provisional liquidator(s), for example those that would enable the presentation of an application under section 166 [equivalent to s.86 of the Companies Law dealing with schemes of arrangement.8

The decision in Re Legend International Resorts Ltd was followed in the subsequent Hong Kong decision in Re Plus Holdings Ltd,9 where the court empowered the provisional liquidators to promote a scheme of arrangement when the company had failed to find a ‘white knight' for a period of two years and it was considered not to be futile for independent professionals to explore viable methods of restructuring.

Given that the primary purpose of a scheme or compromise between a company and its creditors is to return the company to solvency and allow it to carry on business for the benefit of its stakeholders, it is counter-intuitive for those stakeholders to have no entitlement to appoint provisional liquidators to achieve that purpose. When the question comes before the Grand Court for adjudication, it is expected that the Court will take a pragmatic approach consistent with the Hong Kong position and allow stakeholders to utilise a light-touch restructuring remedy.

The area of light-touch restructuring is still developing in the Cayman Islands, as evidenced in the ruling in Re Grant T G Gold Holdings Limited. Justice Segal released an Outline Ruling in the case, where the Court considered a creditor's winding-up petition and application for the appointment of provisional liquidators. The company sought an adjournment of the petition in order to allow it to progress an early stage restructuring. Justice Segal found that in light of all the circumstances it would not be appropriate to order a winding up and he declined to appointed light-touch provisional liquidators to supervise any restructuring. In declining the winding-up order, Justice Segal seemed to rely on the principles espoused in Re Demaglass Holdings Ltd,10 in particular that in the absence of a good reason (such as the opposition of a majority of creditors or lack of prospective benefit from the appointment of a liquidator), a company's unpaid creditor is entitled to a winding-up order virtually as of right. In the present case, the restructuring had the support of a significant group of creditors who also opposed the winding-up order and there was evidence that the appointment of provisional liquidators might negatively impact the proposed restructuring. Instead, Justice Segal granted a short adjournment that would allow the company to progress its proposed restructuring, while ensuring the court could review the position in a timely manner to ensure that the position of all creditors was protected.

In a similar case before Chief Justice Ian Kawaley in the Bermuda Commercial Court, Up Energy Development Group Limited,11 Justice Segal's ruling was relied upon by the company in an attempt to resist a creditor's application for the appointment of provisional liquidators on the basis that it had appointed its own restructuring advisers and that deference should be given to the position of the majority of creditors, who also opposed appointment of the provisional liquidators. Chief Justice Kawaley did not appear to place much weight on Justice Segal's ruling, and instead held that the role of provisional liquidators in insolvency restructurings was so deeply entrenched in Bermudian insolvency law practice that it was now a legitimate expectation of stakeholders. The Chief Justice went on to state there was a strong starting assumption in favour of the appointment of provisional liquidators and it would be a heavy burden to displace. Chief Justice Kawaley appeared to distinguish the position in respect of the weight to be given to the view of the majority creditors when deciding: (1) whether or not to adjourn for restructuring purposes rather than immediately order a winding up - which would ordinarily be considerable (consistent with Re Demaglass Holdings); and (2) whether to appointment provisional liquidators to monitor a restructuring process - which the court was not obliged to blindly follow.

As of publication, Justice Segal's full judgment has yet to be released and it will be curious to see whether he delves deeper into the relevant legal principles and considers the wider impact that the appointment of provisional liquidators can have beyond simply preventing a winding up. At the least, these decisions are interesting to the extent that they appear to evidence a dichotomy between the Cayman and Bermuda positions regarding the appointment of light-touch provisional liquidators where a restructuring is proposed.

In continuing with Bermuda position to inform us on the possible path the Cayman Islands may take with regards to light-touch provisional liquidators and restructuring, Chief Justice Kawaley in Z-Obee Holdings Limited appointed Hong Kong restructuring provisional liquidators as joint provisional liquidators over a Bermuda-incorporated company for the express purpose of initiating a restructuring.12 Z-Obee applied to appoint Hong Kong provisional liquidators as Bermuda provisional liquidators for the explicit purpose of restructuring the company. It was explained to the Bermuda Court that an important reason for the application was the inability of the Hong Kong court to use provisional liquidators for restructuring purposes under Hong Kong law. Once the Bermuda provisional liquidators were appointed, they would ask the Bermuda court to issue a letter of request to the Hong Kong court for recognition and assistance in the standard form acceptable to the Hong Kong court.

In a remarkable piece of judicial cooperation, Mr Justice Jonathan Harris of the Companies Court of the High Court of Hong Kong had earlier adjourned a winding-up petition in relation to the company in Hong Kong precisely so that an application to appoint restructuring provisional liquidators in Bermuda could be made, thereby making modern restructuring law available to an offshore incorporated, Hong Kong listed company.13 Parallel schemes of arrangement in both Hong Kong and Bermuda would likely be the restructuring tools of choice. To progress the restructuring, Hong Kong provisional liquidators were later discharged so that the joint provisional liquidators appointed in Bermuda could seek recognition of their appointment in Hong Kong. At that point, the joint provisional liquidators may introduce parallel schemes to ultimately effect the restructuring of the company in Hong Kong and Bermuda.

The decisions by Chief Justice Kawaley in the Bermuda Supreme Court and Mr Justice Harris in the High Court of Hong Kong demonstrate the common law recognition and assistance techniques available to the courts and practitioners in attempting to solve problems encountered in cross-border insolvency. Furthermore, the case of Z-Obee goes to mitigate the effects of the Legend case that held that the statutory power to appoint provisional liquidators under the Companies Ordinance in Hong Kong to restructure a company's debt, as opposed to preserve assets, is impermissible.

With the judicious use of these staged applications in the offshore and onshore courts, Z-Obee has successfully ‘slingshotted' modern offshore restructuring law into an onshore jurisdiction. It will be very interesting to see how the decision of Z-Obee will affect cross-border insolvency in the future, particular for the Cayman Islands since it has a similar ‘light-touch restructuring' regime to Bermuda. There is no reason, in principal, why the procedure used in Z-Obee could not be used for the restructuring of a Cayman Islands company.

The full extent and effect of the Cayman Islands' light-touch restructuring regime was demonstrated in the restructuring of Mongolian Mining Corporation in the first half of 2017. Mongolian Mining was a Cayman incorporated, Hong Kong Stock Exchange listed, coking coal producer and exporter operating in Mongolia. The company struggled with declining coal prices, caused by oversupply and a weakening demand for China's steel industry, leading to the need to restructure more than US$760 million in offshore domiciled debt. The restructuring was executed by way of a Cayman Islands provisional liquidation of Mongolian Mining, parallel schemes of arrangement under the laws of the Cayman Islands and Hong Kong, bespoke out-of-court consensual arrangements with certain creditors and recognition of the Cayman Islands provisional liquidation proceedings and schemes of arrangement in the United States under Chapter 15 of the US Bankruptcy Code. This successful restructuring was a favourable outcome for Mongolian Mining and its stakeholders and has reinforced the Cayman Islands as a leading restructuring jurisdiction, thanks to the Cayman Island courts, legislative framework and insolvency practitioners.

A company may seek to promote a scheme of arrangement outside of provisional liquidation to make a compromise or arrangement with its members or creditors (or any class of them). An application may be brought by the company itself, any creditor or member of the company or, where the company is being wound up, by the liquidator, and the Grand Court may order a meeting of the company's creditors or members. If a majority in number representing 75 per cent in value of creditors or members present, either in person or by proxy and entitled to vote at the meeting, agree to the terms of the proposed compromise or arrangement, then, subject to the Grand Court's sanction, the scheme will be binding on all of the creditors or members of the company and against the company itself and, if the company is in liquidation, against the liquidator and contributories of the company. The scheme becomes effective only once a copy has been delivered to the Registrar of Companies for filing.

Where a scheme is being promoted outside of provisional liquidation, the directors of the company will remain in control of the company and will formulate the terms of the proposed compromise to be put to its creditors or members (in practice, this will almost always be done with the assistance of qualified insolvency practitioners who will become the scheme supervisors upon the company's creditors or members and the Grand Court approving the scheme). The promotion of a scheme of arrangement outside of provisional liquidation therefore does not afford the company the benefit of the moratorium. The company remains at risk of aggressive creditor action unless it can persuade the Grand Court to use its extensive discretionary powers to stay any proceedings or suspend the enforcement of any judgment order for a period of time. Although untested in the Cayman Islands, it is to be hoped that the English case of Bluecrest Mercantile BV and another v. Vietnam Shipbuilding Industry Group and others14 will be followed. In that case Mr Justice Blair held that his discretion to grant a stay could be exercised in order to protect a proposed scheme of arrangement. Materially, he held that:

It is clear that a vast amount of work has gone into this restructuring and, now that the requisite majority of lenders are agreed and 25 June 2013 is provisionally booked for the hearing, there is at least a reasonable prospect of the scheme finally going ahead. I agreed with [the Applicant] that matters have now reached a delicate stage. I am satisfied that unless I grant a stay now, there is a risk of exactly the kind of free-for-all that Thomas J feared in the Garuda Airlines case. The balance, in my view, is in favour of the proceedings.15

There are broadly two winding-up procedures in the Cayman Islands: compulsory liquidations by order of the Grand Court and voluntary liquidations. The Grand Court has jurisdiction to make a winding-up order in respect of any company incorporated or registered in the Cayman Islands or a foreign company that:

a has property located in the Islands;

b is carrying on business in the Islands;

c is the general partner of a limited partnership; or

d is registered under Part IX of the Companies Law (overseas companies).

Compulsory liquidation

An application to the Grand Court to wind up a company is by petition and made either by the company itself, any creditor (including any contingent or prospective creditor), any contributory of the company, or the CIMA in the case of regulated entities. The most common grounds upon which the Grand Court will order the winding up of a company is on the basis that it is unable to pay its debts as they fall due, or that it is just and equitable to do so.16 In respect of a winding up on the insolvency ground, the test for solvency is a cash-flow test.

At any time after the presentation of a winding-up petition but before the making of a winding-up order, upon an application by the company, a creditor or contributory, the Grand Court may stay or restrain any proceedings against the company on such terms as it deems fit.17 Once a winding-up order is made or a provisional liquidator is appointed, the statutory moratorium is invoked and no suit, action or other proceedings, including criminal proceedings, may be proceeded with or commenced against the company except with the leave of the Grand Court.18 Section 99 of the Companies Law also provides that once a winding-up order has been made, any disposition of the company's property and any transfer of shares made after the commencement of the winding up is, unless the Court otherwise orders, void.19

Once a winding-up order has been made and official liquidators are appointed, the powers of the directors are automatically terminated. Where the liquidation is of a cross-border nature, it is now common for there to be more than one liquidator appointed over the undertaking, assets and property of the company, with an overseas qualified liquidator dealing with the assets and investigations outside of the Cayman Islands. The Insolvency Practitioner's Regulations 2008 require that, in such circumstances, there must be at least one qualified insolvency practitioner resident in the Cayman Islands appointed over the company.

In The matter of Primeo Fund (in Official Liquidation),20 the Court of Appeal distinguished between liquidators' statutory obligations under the Companies Law and their obligation as litigants before the court. In these proceedings, the joint official liquidators of Primeo sought damages against the Bank of Bermuda and HSBC. The bank defendants claimed the liquidators had not complied with their discovery obligations and sought to compel the liquidators to issue a letter of request under section 103 and the collecting of books and records of the company under Section 138 (both of the Companies Law) against a bank in Austria.

At first instance, Justice Jones ordered that the joint official liquidators issue the letter of request under Sections 103 and 138. However, this decision was overturned by the Court of Appeal on the basis that: (1) the defendants were attempting to use the liquidators' statutory powers to seek documents from a third party in circumstances where Grand Court Rules did not provide for third party discovery; (2) the first instance judge had conflated the liquidators' statutory duties with the obligation to give discovery under civil procedural law and had wrongly suggested liquidators have to go so far as to assist adversaries to obtain documents in the course of litigation; (3) the court should not interfere with the conduct of the liquidator other than in exception circumstances and the rationale for making the order came ‘nowhere near' meeting the exceptional circumstances test set out in Edennote;21 (4) the liquidators' statutory powers are not for the benefit of a party in the liquidation, where the exercising of those powers does not serve the liquidation; and (5) it is an abuse of power if statutory powers conferred for a certain purpose are deliberately used to obtain a result outside the contemplation of the law creating the power.

The official liquidators will take control of the company's affairs and will seek to realise its assets for the benefit of its stakeholders (which in the case of an insolvent company will be its creditors) as a whole and make a distribution in accordance with the statutory priorities under the Companies Law, having first paid all the costs and expenses in the liquidation. The appointment of official liquidators does not prohibit secured creditors from enforcing their security; however, the secured creditor may request the liquidator to realise the assets subject to its security. If the liquidator does so, he or she will be entitled to deduct his or her reasonable costs of realising the assets before distributing the balance of the proceeds to the secured creditor.

After considering secured creditors and paying all costs and expenses in the liquidation, realisations will first be applied to pay all preferential debts, which broadly comprise certain debts due to employees and the Cayman Islands government, subject to a maximum amount prescribed by the Companies Law. Any remaining unsecured creditors will receive a distribution according to the level of their debt, with any surplus after satisfying all creditor claims being paid to the members of the company. In the event that there are insufficient assets in the liquidation to satisfy the claims of all unsecured creditors, then debts and liabilities of the company (other than any due to members in their character as such) will be paid on a pari passu basis. Member claims rank lower in priority than claims of ordinary creditors.22

Voluntary liquidation

A voluntary liquidation is commenced by passing a members' resolution, upon the expiry of a fixed period or upon the occurrence of a specified event stated in the company's memorandum and articles of association. A company resolves by special resolution that it be wound up voluntarily or if the company, in general meeting, resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts as they fall due.23 The voluntary liquidation of the company commences upon the passing of the resolution, the expiry of the fixed period or the occurrence of the specified event.24

A liquidator appointed to conduct a voluntary liquidation does not require the Grand Court's authorisation to exercise his or her powers; however, the liquidator can apply to the Court to determine any question that arises during the winding-up process. A voluntary liquidator is required to apply to the Grand Court for an order that the liquidation continues under the Grand Court's supervision unless, within 28 days of the liquidation commencing, the directors sign a declaration that the company will be able to pay its debts in full (with interest) within a period not exceeding 12 months after the commencement of the liquidation. The making of a supervision order effectively converts a voluntary liquidation to an official liquidation, and the provisions of Part V of the Companies Law will apply.

Even after the directors make such a declaration, the liquidators or any creditor or member can apply to bring the liquidation under the Grand Court's supervision if the company is or is likely to become insolvent, or court supervision will facilitate a more effective, less expensive or quicker liquidation of the company in the interests of the creditors and members. The liquidation will then continue as a compulsory liquidation.

In certain circumstances where directors of the company determine that the company is insolvent and cannot trade out of its difficulties or find new funding, it might be appropriate to pass an ordinary resolution of its members to place the company into voluntary liquidation followed by confirmation that the directors are not able to sign the declaration of solvency. The voluntary liquidator can then apply to the Grand Court for a supervision order and seek appointment as official liquidator.

The appointment of liquidators in these circumstances may help circumvent any challenges or concerns as to whether directors are entitled to present a winding-up petition in the company's name. In the recent case of CHC Group Ltd Justice McMillan considered both the decisions of Justice Jones in Re China Milk Products Group Limited,25 where it was held that directors of an insolvent company would be allowed to present winding-up petitions on behalf of their companies without approval by the shareholders, and the decision in Re China Shanshui Cement Group Limited26 where Justice Mangatal reached a different conclusion in deciding that directors of a company do not have standing or authority to present a winding-up petition nor the power or authority to apply for the appointment of joint provisional liquidators unless they are expressly authorised to do so by the company's articles of association or a valid shareholder resolution has been passed.27

Justice McMillan distinguished both China Milk and China Shanshui on the basis that they had no bearing on the present situation where there was a separate creditor winding-up petition in existence, which was then followed by an application by the company, acting by its directors, for the appointment of joint provisional liquidators for the purpose of restructuring. It was held that where a creditor has already filed a winding-up petition in respect of a company, not only may the directors of the company apply for the appointment of joint provisional liquidators, but also that they may take that step without a shareholders resolution or express provision in the company's articles of association. This interpretation appears to contradict the English common law position in Re Emmadart Ltd28 as well as the Cayman Islands' common law position in China Shanshui. The case of CHC Group confirms the workaround of having a creditor, not the company, file the petition underpinning the proceedings for provisional liquidation for the purposes of restructuring.

ii Taking of enforcement of security

The most common forms of security in the Cayman Islands are mortgages and fixed and floating charges over a company's property, undertaking and assets. Secured creditors can therefore appoint receivers over charged assets to enforce their security interests; the security instrument will ordinarily detail the assets that the receiver will be appointed over and the extent of the receiver's powers. Receivers are not supervised by the court, and usually owe their duties to the secured creditor appointing them and not the company.

The security instrument may detail enforcement provisions other than the appointment of receivers, and may include the right for the secured creditor to take possession of and vote in relation to the charged assets, sell the charged assets to a third party, or effect any contractual right of set-off or otherwise.

iii Duties of directors of companies in financial difficulty

While there is no statutory obligation on a company or its directors to commence winding-up proceedings, the Companies Law and the common law do impose various duties and responsibilities on directors to the company. If a company is insolvent or it is likely to become insolvent, the duties and responsibilities of its directors also extend to the interests of the company's creditors. Directors and officers of a company also include shadow directors.

A shadow director is defined as any person in accordance with whose directions or instructions the directors of a company are accustomed to act, provided that a person is not deemed to be a shadow director by reason only that the directors act on advice given by him or her in a professional capacity. Therefore, an investment manager of a company making recommendations as to the purchase or sale of investments should not, for example, ordinarily constitute a shadow director. Importantly, however, unlike in other common law jurisdictions, the Companies Law does not expressly subject shadow directors to the common law or equitable duties imposed on de jure directors. Rather, shadow directors are only subject to penalties for fraudulent trading, misconduct in the course of a winding up and making a material omission in any statement relating to the company's affairs.

The Companies Law contains numerous provisions relating to the duties of directors and prescribes penalties for any breach. The most serious of these involve dishonesty or the authorising of illegal payments and carry both criminal and civil penalties. The insolvency provisions of the Companies Law also include certain offences against directors, such as fraud in anticipation of winding up,29 transactions in fraud of creditors,30 misconduct in the winding up31 and fraudulent trading.32 These proceedings are commenced by the official liquidator and, if proven, the Grand Court will order the director to contribute to the losses suffered by the company as a result of his or her actions.

The memorandum and articles of association will also detail the general duties that directors owe to the company. In addition, given that there is no statutory codification of the general duties and liabilities owed by directors to its company in the Cayman Islands, principles have developed that derive from English common law. At common law, a director owes two types of duty to the company: fiduciary duties, and duties of skill, care and diligence. Directors' fiduciary duties to their company can broadly be described as their duty to act in good faith in their dealings with or on behalf of the company, and to exercise the powers and fulfil the duties of the office honestly.33 In recent years, English and Commonwealth authorities have moved from the traditional purely subjective test referencing the individual director whose conduct is being judged, towards an objective test for the applicable standard of skill and care that a director will be required to have. Following these cases, it is likely that the applicable skill and care test will be that of:

A reasonable diligent person having both - (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and (b) the general knowledge, skill and experience that that director has.34

Therefore, there is a minimum objective standard based upon the functions given to the director in question, but the standard can be raised where the director in question has more knowledge, skill and experience than would normally be expected (e.g., if he or she has been recruited as an expert in a particular business of the company). Breaches of these duties may result in the director being held personally liable, and a subsequently appointed liquidator can bring an action to recover losses on behalf of the company that derived from the director's breach of duty.

iv Clawback actions

The Companies Law provides for a number of clawback actions to enable a subsequently appointed liquidator to recover assets belonging to the company and thereby maximise returns for stakeholders. For example, when a company is being wound up or falls under the supervision of the Grand Court, all dispositions of the company's property and any transfer of shares of the company made between the date of the presentation of the petition and the making of the winding-up order are void, unless the Grand Court orders otherwise.35

Clawback claims can be divided into claims against members of the company to recover redemption payments, and claims against other third parties to recover company assets.

A payment out of capital to a member made at a time when the company is insolvent, or that has the effect of rendering the company insolvent, is void.36 In the event of such an unlawful payment, it is arguable that the effect of the illegality is to render the payment subject to a claim in restitution by the liquidators.

A clawback of redemption payments may also be available where members have been overpaid as a result of a misstated net asset value attributed to the company's property. In the case of a solvent company that has issued redeemable shares at prices based upon its net asset value from time to time, the liquidator shall have power to settle and, if necessary, rectify the company's register of members.37 This power of rectification may be exercised where the misstated net asset value is not binding upon the company and its members by reason of fraud or default.38 This statutory restatement procedure does not expressly provide for repayment by former investors of any sums that they have been overpaid; nor does it provide for any procedure to be invoked by the liquidators to make such recoveries. It would, therefore, seem to logically follow that on a restatement of the net asset value of the company, and consequent rectification of the register of members, economic consequences, should follow.

Although the existence of this power must be considered in light of the Privy Council decisions in Fairfield Sentry Ltd v. Migani [2014] UKPC 9 and Pearson v. Primeo Fund [2017] UKPC 19, the effect of which was to allow former members or redemption creditors to retain redemption payments or enforce redemption claims against a BVI and Cayman company respectively, despite the fact that the net asset value of the shares in question were calculated by reference to fictitious assets and profits. It should be noted that neither the scope nor application of Section 112(2) of the Companies Law was considered by the Board in Pearson v. Primeo Fund so this may yet be the subject of litigation in future.

In relation to third-party recipients of company assets, any transactions in which property of the company is disposed of at an undervalue with the intention of defrauding the company's creditors are void upon an application by the official liquidator.39 The official liquidator must commence such proceedings within six years of the disposition, and the burden of proof will be upon the liquidator to demonstrate that there was an intention to defraud.

A transaction can also be set aside on the basis that it constitutes a voidable preference.40 The Companies Law does not specify who can bring proceedings to set aside a transaction as a voidable preference; however, it is widely considered that only an official liquidator would have the capacity to do so. A transaction with a creditor will constitute a voidable preference if it can be shown that the company executed the transaction in the six months prior to commencement of the company's liquidation, and at a time when it is unable to pay its debts as they fall due; and the principal or dominant intention of the company's directors in executing the transaction is to give that creditor a preference over other creditors.41 If the party that receives the benefit of the payment, transfer or charge is a related party, such that it has the ability to control the company or exercise significant influence over it in making financial and operational decisions, such payment will have been deemed to have been made with a view to giving a preference.42 Where a transaction is set aside as being a preference, it is void, and the creditor will be required to return the payment or asset and claim in the liquidation for the amount of its claim.

In the matter of Re Weavering Macro Fixed Income Fund Ltd (in Liquidation)43, the Court of Appeal considered in substantial detail each stage of the test to be applied in identifying voidable preferences under Section 145(1) of the Companies Law. Weavering concerned an appeal against an Order of Justice Clifford declaring certain payments were invalid preference payments. In considering the solvency test under Section 145(1), the Court of Appeal confirmed the applicability of the cash flow test in the Cayman Islands and clarified that this test was not confined to debts that are immediately due and payable, but also extends to debts that ‘will become due in the reasonably near future' and that any other conclusion would lead to artificiality.

On the question of establishing an intention to prefer on the part of the company in liquidation, the Court of Appeal dismissed the suggestion that a ‘taint of dishonesty'44 is required in order for a payment or transfer to be deemed preferential. The Court of Appeal explained that the ‘preference' referred to in the section refers to one creditor receiving more than the amount to which they would be entitled on a pari passu basis, not necessarily a preference of a fraudulent nature. It is also irrelevant to the question of identifying a preference that the recipient of the payment was paid by mistake. The liquidator need only prove that the company intended to prefer a creditor (not that particular creditor necessarily) over others.

The Court of Appeal also confirmed that common law defences, such as change of position, are not available to statutory claims under section 145(1) and as such, where the elements of Section 145(1) are made out, the payment is automatically avoided and must be returned.

III RECENT LEGAL DEVELOPMENTS

The provision of services of independent directors to funds and companies alike is a growing facet of the Cayman Islands' financial services industry. It became apparent during the credit crisis that independent directors played a key role when hedge funds were faced with difficult decisions, as they ensured compliance with the fund documents and that shareholders were treated fairly as far as possible. Institutional investors are now, in the majority of cases, requesting that all new hedge funds have a majority of independent directors appointed to the board as part of their investment criteria.

To provide statutory weight and robustness to this growing sector, the government approved the Directors Registration and Licensing Law 2014, which came into effect on 4 June 2014. The new legislation requires all directors of mutual funds regulated by the Mutual Funds Law (2013 Revision) and directors of companies who are registered as ‘excluded persons' under the Securities and Investment Business Law (2011 Revision) to register with the CIMA. The new Law provides for the registration and licensing of individuals or companies that are appointed as directors of mutual funds and entities carrying on securities investment business in the Cayman Islands. The new regime also requires individuals acting as a director in 20 or more companies to apply for a professional director's licence unless they meet the limited exceptions. Professional directors are now required to have professional insurance coverage with a minimum aggregate cover of US$1 million, including a minimum cover of US$1 million for each and every claim.

Furthermore, the highly anticipated Limited Liability Companies Law, 2016 (LLC Law) was published in the Cayman Islands on 28 June 2016 and came into force on 8 July 2016.

The introduction of the new Cayman Islands limited liability company (an LLC) satisfies the demands of stakeholders, in particular in North America and Asia, for a more flexible corporate offshore structure, and provides a welcome addition to the existing range of corporate vehicles available in the Cayman Islands. The LLC is closely aligned with the Delaware limited liability company and is expected to be popular as a vehicle of choice for investment fund and private equity structures, as well as corporate transactions, including joint ventures, special purpose vehicles and holding companies, where the LLC structure can be tailored to suit the particular transaction.

The LLC Law provides for the formation and operation of an LLC in the Cayman Islands, as a body corporate with limited liability and separate legal personality from its members. The LLC Law also provides for the conversion or merger of existing Cayman Islands exempted companies into LLCs and the continuation into the Cayman Islands as an LLC of entities established in another jurisdiction. In relation to the insolvency or restructuring of an LLC, the LLC Law incorporates by reference, and largely reflects Part V of the Companies Law, containing provisions which mirror those in the Companies Law dealing with arrangements and reconstructions. As such, to all intents and purposes, the insolvency or reconstruction of an LLC will be subject to the same rules as are applicable to exempted limited companies.

IV SIGNIFICANT TRANSACTIONS, KEY DEVELOPMENTS AND MOST ACTIVE INDUSTRIES

In the recent case of Natural Dairy (NZ) Holdings Limited,45 the Grand Court confirmed that the court may substitute a contributory petitioner on a contributory's winding-up petition, even though there is no express power to do so under the Companies Winding-Up Rules. Following the presentation of the petition, the Petitioner discovered it was the beneficial - not the registered - owner of its shares, and, therefore, did not have standing to petition for winding up under the Companies Law. The company argued that substitution was not possible and sought to strike out the petition as a nullity. It was argued successfully that the court should allow substitution and pointed to the practice of Cayman court prior to the introduction of the Companies Winding-Up Rules, and the modern practice of the English High Court, to permit substitution on a contributory's petition, notwithstanding the absence of an express power to do so under the Insolvency Rules 1986, which applied in the jurisdiction prior to the introduction of the Companies Winding-Up Rules. The Petitioner relied on a series of decisions starting with HSH Cayman I GP Limited46 in which the Cayman courts confirmed their inherent jurisdiction to deal with irregularities in Companies Winding-Up Rules proceedings. This was necessitated by the lack of an equivalent in the Companies Winding-Up Rules to Order 2, Rule 1 of the Grand Court Rules, which enabled the court to relieve a party from noncompliance with procedural requirements. Justice Segal permitted substitution, pointing out that the lack of an express power to substitute on contributories' petitions - in contrast with the position regarding creditors' petitions - was probably because the rule was intended to prevent companies paying off petitioning creditors one by one, and there was less need for such a rule regarding contributories' petitions as contributories are not so easily bought off.

In another decision in Primeo Fund (in Official Liquidation) v. Bank of Bermuda and HSBC Securities Services (Luxenbourg),47 the Court of Appeal considered the scope of legal professional privilege in the context of witness statements. The Court of Appeal reaffirmed the view that claims for privilege should be viewed narrowly and weigh against the importance of transparency and openness in civil proceedings. In considering when privilege is lost in respect of witness statements filed on other or related proceedings, the Court of Appeal confirmed that: (1) witness statements are prima facie discoverable; (2) privilege does not apply to witness statements that have been finalised and unconditionally served (even if they were not relied on a trial); and (3) when privilege in a witness statement is lost, it is as against the whole world. The Court of Appeal declined to go so far to say witness statements lose their privilege before they are served.

The court in Uni-Asia Holdings Limited48 recently sanctioned a members' meeting of a company for the purpose of considering a ‘migration' scheme of arrangement. The arrangement proposed by the Cayman company was that its members exchange their shares for shares in a Singaporean company. The intended objective - an internal restructuring - was for the Singaporean company to become the new holdings company for the group and the Cayman company to become its subsidiary.

Shareholders may hold their shares through a central depository, with the result that a single shareholder (the depository) may hold shares on behalf of several owners beneficiary. This poses a unique problem in a members' scheme of arrangement because the scheme is passed on a ‘head count' (and ‘value') test.

In the Cayman Islands, the approved approach is to look through the register and treat the registered shareholders as having a head for each beneficial owner, rather than a single head, for the head count test. The challenge then becomes how to incorporate a mechanism into the scheme documents that enfranchises those beneficial owners to vote on the scheme when that right otherwise rests with the registered shareholder.

In this instance, the court approved a mechanism by which the nominee gave voting proxies to each beneficial owner (or someone else appointed by the owner) in respect of that owner's shares. The court rolled up its sleeves when it came to the drafting of the scheme documents on that issue (and others) requiring that: (1) the mechanism be hard-wired into the scheme documents - it was not sufficient to rely on a provision in the articles of association by which the registered shareholder was ‘deemed' to authorise a beneficial owner to act even without a formal proxy; and (2) the order specify that the registered shareholder be able to split its vote.

V INTERNATIONAL

The Cayman Islands has elected not to adopt the UNCITRAL Model Law on Cross-Border Insolvency per se. However, in 2009 the Cayman Islands comprehensively revamped its cross-border insolvency legislation, inserting international cooperation provisions, in the form of Part XVII of the Companies Law,49 that are not dissimilar to the provisions of the Model Law. In addition, the Cayman Islands Grand Court applies Model Law principles in a manner that means the Model Law is strictly unnecessary.50

In some ways, Part XVII is more liberal (or universalist) than the Model Law:

By implementing through its Courts a public policy model on a par with international codes of conduct, the territory has vouchsafed its ability to render the kind of international judicial assistance that is critical to the fulfilment of the tenets of the UNCITRAL Model Law and to the principles of universality of bankruptcy that the Law embraces.51

Part XVII of the Companies Law codifies the Grand Court's powers to make orders in aid of foreign insolvency proceedings, and does so in terms substantially similar to the key tenets of the Model Law.

Section 240 of the Companies Law provides definitions for the international cooperation provisions of Part XVII. ‘Debtor' means a foreign corporation or other foreign legal entity subject to a foreign bankruptcy proceeding in the country in which it is incorporated or established. The definition of ‘debtor' in Section 240 draws upon the Model Law language of ‘non-main proceedings' by use of the word ‘established', but also confers jurisdiction on an application under Part XVII based merely on the debtor's incorporation in the country of the foreign bankruptcy proceeding court.52 The reference to incorporation as a qualifying test for a foreign representative's standing to apply for ancillary relief under Part XVII is a lower (more universalist) threshold than that which applies in the Model Law.

Consistent with this liberal approach, Part XVII does not require a determination of a debtor's centre of main interest53 or any determination as to whether particular foreign proceedings are main or non-main. Further, in order to seek ancillary orders pursuant to Section 241, there is no requirement for a foreign bankruptcy proceeding to be subject to the control of or supervision by the foreign court.54

Foreign office holders or representatives (meaning a trustee, liquidator or other official appointed for the purposes of a foreign bankruptcy proceeding) have been recognised in the Cayman Islands in two noteworthy decisions in Re Bernard L Madoff Investment Securities LLC (BLMIS) (5 February 2010) and Re Reserve International Liquidity Fund (16 April 2010) in reliance upon the dicta in Cambridge Gas Transport Corporation v. The Official Committee of Unsecured Creditors55 holding that the purpose of common law (i.e., non-Model Law) recognition is to give a foreign office holder or creditors the remedies to which they would have been entitled if the equivalent proceedings had taken place locally, without the need to commence parallel insolvency proceedings locally.

Article 13 of the Model Law (parity of treatment for foreign and local creditors) is enshrined in Section 242(1)(a) of Part XVII of the Companies Law, which provides that all creditors should be treated equally and fairly, regardless of their domicile.

Articles 15 and 16 of the Model Law set out the procedure for the recognition of foreign insolvency proceedings. ‘In the Cayman Islands, as a matter of established practice, it is likely that a foreign representative of a company will be recognised where it is appointed by a court in the country of the company's incorporation.'56 The criteria for the Grand Court in deciding whether to make an ancillary order for recognition pursuant to Part XVII of the Companies Law are ‘[…] matters which will best assure an economic and expeditious administration of the debtor's estate', consistent with the principles of the Model Law. Article 21 of the Model Law provides for the relief that may be granted to a foreign representative upon recognition. Both Article 21 and Section 241(1) provide for the recognition of foreign representatives, stays of proceedings and enforcement against the debtor's property, examination of parties with relevant information and assumption of control of assets by the foreign representative.

In Re Trident Microsystems (Far East) Limited 57 is another example of the purposive approach towards international cooperation taken by the Grand Court. Trident was a company incorporated in the Cayman Islands, and its parent company was incorporated in Delaware. Both entities applied to the Delaware Bankruptcy Court for relief seeking, inter alia, the Court's sanction for the sale of certain assets. In the Grand Court, pending the determination of Trident's winding-up petition, joint provisional liquidators were appointed, and it was ordered that any sale of the company's assets be subject to court approval. The Grand Court subsequently adjourned the winding-up petition to allow for a consideration of a potential restructuring of the companies' TV business after the proposed sale of its set-top box business. The Delaware Court and the Grand Court approved a cross-border insolvency protocol agreement entered into between the parties that provided a framework for the Courts' cooperation; in particular, it provided that the liquidators would seek approval of the procedures for the sale of material assets and authority to sell first from the Delaware Court, and thereafter from the Grand Court, and would not complete any sales unless the necessary approvals were received from both Courts.

In October 2016, judges from 10 different jurisdictions, including the Cayman Islands, met in Singapore for the inaugural Judicial Insolvency Network (JIN) Conference. The result of the conference was the JIN Guidelines for Cooperation in Cross-Border Insolvency Matters. The Guidelines were designed primarily to enhance communication between courts, insolvency representatives and other parties in the context of global restructurings and insolvency. As a result of the increased efficiency, it is hoped that stakeholders will see a reduction in delay and cost. As of the date of publication of this chapter, Bermuda and the BVI have both adopted the Guidelines. It will be interesting to see if and when the Cayman Islands follows suit.

VI FUTURE DEVELOPMENTS

The Companies Law in the Cayman Islands is substantially derived from the UK Companies Act 1948, and although Part V was revised considerably in 2009, it has not enjoyed the same developments as its English counterpart and those of many other offshore jurisdictions. For example, Part V contains 67 sections, whereas the BVI Insolvency Act comprehensively comprises 505 sections. To fill the various lacunae in the Companies Law, the Grand Court has adopted a purposive approach to its interpretation and developed a cohesive set of principles that largely complement the contemporary common law position.

Notwithstanding the status of the Companies Law, the Cayman Islands Law Reform Commission can and does make recommendations on a regular basis in respect of proposed changes to the Companies Law. In 2014, the Commission circulated a consultation paper examining the position of directors in the Cayman Islands and discussing whether there is a need for codification of directors' duties. Underpinning the role of the Law Reform Commission is the Insolvency Rules Committee, which is constantly reviewing the Companies Winding-Up Rules. It is expected that the monitoring of the Companies Law by the Law Reform Commission and the Insolvency Rules Committee will be a continuing venture to ensure that the legislation meets the needs of the Cayman Islands financial services industry.

Nevertheless, Cayman Islands insolvency and restructuring professionals are currently discussing revisions of the Companies Law, which would have the effect of introducing ‘restructuring officers'. It is hoped, however, that any amendments will maintain the present balance in Cayman Islands restructuring provisions of the rights of all interested parties.

The ‘just and equitable' winding-up petition is the remedy of choice for aggrieved shareholders in Cayman Islands companies. Not only is a petition the gateway to winding up a company, but once the court is satisfied that it is just and equitable to do so, it may grant alternative relief such as order regulating the conduct of the company's affairs, or an order that a shareholder be bought out. However, the Companies Law expressly limits the right to petition a shareholder who is either the original allottee of shares, or has been the registered shareholder for at least six months prior to presentation of the petition. This provision reinforces and extends the common law principles that a company need not recognise trusts of its shares, which has also be recognised by the Cayman Islands courts in Svanstrom v. Jonasson58 and Schultz v. Reynolds,59 both of which held that the beneficial owner of shares was not able to purse a derivative action in the name of the company. The expressed legislative intent behind this provision was to prevent vulture funds from buying shares purely for the purpose of petitioning. However, the effect is to exclude the large number of investors who hold their shares through custodians or clearinghouses from the remedy of just and equitable winding up.

The vast majority of such investors are unaware that this is the effect of using a custodian, and many custodians are unwilling to petition. Even if a custodian is willing to transfer the shares to the beneficial owner to allow it to petition in its own name, in most cases relief is required urgently and the requirement to wait six months before petitioning will be fatal. The law is ripe for review, as the effect of the current provisions, combined with the widespread use of nominees, is that many investors are left without an effective remedy for wrongdoing by the company.

1 Ian Mann, Chai Ridgers and Madeleine Heal are partners at Harney Westwood & Riegels.

2 OECD Economic Outlook June 2017, page 2.

3 Appleby. Snapshot: Review of 2016 Offshore Petition Filings & Court Orders.

4 Fichtner, J. Explaining Cayman's success through its role in the Anglo-American triangle, 26 April 2017.

5 Ibid.

6 Bloomberg, ‘Can China Really Rein in Credit?' 15 June 2017.

7 Section 104(2) of the Companies Law.

8 [2006] 2 HKLRD 192 per Hon Rogers VP at Section 35; see also Re Luen Cheong Tai International Holdings Ltd [2003] 2 HKLRD 719.

9 [2007] 2 HKLRD 725 per Kwan J at Section 18.4

10 [2001] BCLC 633.

11 In the matter of Up Energy Development Group Limited [2016] SC (Bda) 83 Com (20 September 2016).

12 In the matter of Z-Obee Holdings Limited [2017] SC (Bda) 16 Com (21 February 2017).

13 Re Z-Obee Holdings Ltd HCCW 85/2014 (27 June 2016).

14 [2013] EWHC 1146 (Comm) (22 April 2013).

15 Ibid at [41].

16 Sections 92(d) and 92(e) of the Companies Law.

17 Section 96 of the Companies Law.

18 Section 97 of the Companies Law.

19 A winding up is deemed to commence at the time of the presentation of the petition (Section 100(2) of the Companies Law).

20 Primeo Fund (in Official Liquidation) (unreported, 21 November 2016).

21 [1996] 2 BCLC 389.

22 Section 37(7) of the Companies Law.

23 Section 116 of the Companies Law.

24 Section 117 of the Companies Law.

25 Re China Milk Products Group Limited [2011 (2) CILR 61].

26 Re China Shanshui Cement Group Limited (unreported, 25 November 2015).

27 In the Matter of CHC Group Ltd (unreported, 24 January 2017).

28 Re Emmadart Ltd [1979] Ch. 540.

29 Section 134 of the Companies Law.

30 Section 135 of the Companies Law.

31 Section 136 of the Companies Law.

32 Section 147 of the Companies Law.

33 Fiduciary duties covered by the general obligation include duties to act in good faith; to exercise powers in the company's interests; to exercise unfettered discretion; not to make a secret profit; to avoid any conflict of interests; and to make disclosure where appropriate.

34 Re D'Jan of London Limited [1994] 1BCLC 561. See also the Grand Court decision in Weavering Macro Fixed Income Fund Limited (in liquidation) v. Peteson and Ekstrom (Jones J, 26 August 2011).

35 Section 99 of the Companies Law.

36 Section 37(6)(a) of the Companies Law: ‘A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment out of capital is proposed to be made the company shall be able to pay its debts as they fall due in the ordinary course of business.'

37 Section 112(2) of the Companies Law.

38 Order 12, Rule 2(1) of the Companies Winding-Up Rules 2008.

39 Section 146 of the Companies Law.

40 Section 145 of the Companies Law.

41 See RMF Market Neutral Strategies (Master) Limited v. DD Growth Premium 2X Fund [2014 (2) CILR 316].

42 Section 145(2) of the Companies Law.

43 Re Weavering Macro Fixed Income Fund Ltd (in Liquidation) (unreported, 18 November 2016).

44 Re Kushler Ltd [1943] 1 Ch 248.

45 In the Matter of Natural Dairy (NZ) Holdings Limited (In Provisional Liquidation) (unreported, 22 May 2017).

46 [2010] 1 CILR 114.

47 Primeo Fund (in Official Liquidation) v. Bank of Bermuda and HSBC Securities Services (Luxembourg) (unreported, 18 November 2016).

48 FSD 34 of 2017.

49 Look Chan Ho, A Commentary on the UNCITRAL Model Law, Third Edition, 2012 (see in particular the chapter written by Tony Heaver-Wren and Jeremy Walton on the Cayman Islands, at page 101).

50 Save that, of course, the certainty of having the same Model Law apply in Cayman as it does in other places creates a common currency (see Guide to the Enactment of the UNCITRAL Model Law on Public Procurement (Guide to the Enactment of the Model Law)).

51 Anthony Smellie, ‘Cayman Islands Judiciary, Grand Cayman, Cayman Islands', Beijing Law Review, 2011, 2, pages 145-154.

52 Stutts v. Premier Benefit Capital Trust [1992-1993] CILR 605.

53 Look Chan Ho, A Commentary on the UNCITRAL Model Law, Third Edition, 2012 (see in particular the chapter written by Tony Heaver-Wren and Jeremy Walton on the Cayman Islands, at page 105).

54 Consistent with the Model Law, Article 2(a) and (e), and the Guide to the Enactment of the Model Law.

55 Cambridge Gas Transport Corporation v. The Official Committee of Unsecured Creditors [2006] 3 WLR 689.

56 Look Chan Ho, A Commentary on the UNCITRAL Model Law, Third Edition, 2012 (see in particular the chapter written by Tony Heaver-Wren and Jeremy Walton on the Cayman Islands, at page 110).

57 In the matter of Trident Microsystems (Far East) Limited [2012] (1) CILR 424.

58 [1997] CILR 192.

59 [1992-3] CILR 59.