Navigating restructuring in the Cayman Islands

The Court may appoint restructuring officers where the company is or is likely to become unable to pay its debts and intends to present a compromise to creditors. Once these statutory preconditions are met, the Court has a broad discretion as to whether to make the appointment. There is a built-in presumption that the company’s board of directors will retain at least some powers and functions to continue to control the company.

A key advantage is the automatic stay on claims upon filing a petition (absent leave of the Court). This provides vital breathing space for companies. However, the Court will remain vigilant to potential abuse. A company that is hopelessly insolvent and continuing to trade will not obtain relief. The Court must be satisfied that the appointment benefits those with the financial interest in the company. Strict time limits apply - the petition must be heard within 21 days of filing. A company must also present a meaningful restructuring plan at the time of filing.

Unlike light touch provisional liquidators’, whose appointment must have been precipitated by a winding up petition, the appointment of restructuring officers cannot be converted to a winding up order. Rather, restructuring officers must first have been discharged, or leave given to a creditor or contributory, before a winding up petition can be presented.

The Court monitors progress at regular case management conferences and must be satisfied that the statutory preconditions for the appointment of joint restructuring officers continue to be met. If not, the Court is under a duty to terminate the appointment.

The restructuring officer regime has not displaced the Court’s jurisdiction to appoint provisional liquidators on application by a company. Contrary to the view of certain practitioners, it was never intended to do so. The Court may appoint a provisional liquidator on the application of a debtor “if it considers it appropriate to do so.” This differs from creditor or contributory applications seeking the appointment of a provisional liquidator, which requires them to demonstrate a prima facie  case for winding up and that the appointment is necessary to prevent misuse of company assets, oppression of minority shareholders, or director misconduct.

Companies facing distress now have a choice about how to initiate any restructuring. Provisional liquidators may be more appropriate where broader powers are needed - for example, where there is internal board disagreement such that allowing the directors to continue in their management role is not workable, or where there is a need for powers to investigate an alleged internal fraud. A detailed restructuring plan is also not required before the Court can appoint provisional liquidators; though the

However, unlike the restructuring officer regime, there is no automatic moratorium on claims when an application is made, only upon actual appointment.

Earlier decisions on the provisional liquidator regime remain instructive. These decisions assist the Court in determining the proper approach to the restructuring officer appointment, subsequent questions that arise following their appointment such as whether their appointment should be continued, or the basis upon which it may be appropriate to appoint provisional liquidators for restructuring purposes.

As the restructuring officer regime matures, further guidance will undoubtedly emerge. Companies should remain attentive to developments in both regimes - each of which has its place in the Cayman Islands’ restructuring landscape.

This is an excellent summary of the current jurisprudence regarding the RO regime and its relationship with the Court’s jurisdiction to appoint provisional liquidators. I have been keen to stress (having been involved in the drafting of the RO amendments to the Companies Act in my capacity as chair of the Insolvency Rules Committee) that the Court’s RO jurisdiction was deliberately drafted to be wide and flexible to enable debtors and the Court to craft relief to meet the needs of the particular case. The Court has the power to make any suitable order so that for example there is no restriction on the role of and powers that may be given to the RO. This means that the RO can be given powers to manage the debtor’s business and displace management or to lead restructuring negotiations where that can be justified. It also seems to me that the Court’s supervisory role in overseeing the progress of the case in which ROs have been appointed, while vigilant to prevent any abuse of the regime and to assist ROs, also needs to be flexible and based on pragmatic case management principles that avoid unnecessary expense and the revisiting of earlier decisions by the Court. The choice between the appointment of a RO and JPLs is primarily a pragmatic one having regard to what role the Court appointed officer needs to be given to make the case a success. The power to appoint JPLs under the amended section 104(3) is now also intended to be wide and flexible. Earlier case law is a guide but not a straitjacket. ”

This article first appeared in Global Turnaround, the leading magazine for restructuring and insolvency professionals

10 www.globalturnaround.com | June 2026