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The Cayman Islands insolvency reform: Restructuring officer and refined scheme of arrangement

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01 Aug 2022

In a highly welcomed modernisation, the Cayman Islands Government has introduced the Companies Amendment Act 2021 which will commence on 31 August 2022, allowing a debtor to seek the appointment of a restructuring officer, supported by a worldwide moratorium (viz unsecured creditors), with a view to restructuring its debts through a “refined” scheme of arrangement.

The regime should qualify as a “collective insolvency proceeding” for recognition and assistance by Model Law and similar jurisdictions. The refined scheme will be available to both Cayman Islands and foreign debtors (with qualifications) and will, so long as “efficacy” is likely, compromise both Cayman Islands and foreign law governed debt. It creates the necessary ecosystem for the Cayman Islands to become a global restructuring hub.

This guide sets out our house view about this exciting new regime that promotes global cross border co-operation and reduces transactional costs for stakeholders of distressed companies with multi-jurisdictional capital structures. We believe that professionals have an important positive role to play in creating the necessary consensus and environment for efficient co-operative global restructuring. Private investors are understandably more likely to invest where the rules are predictable, transparent, and broadly consistent across jurisdictions, since this gives reassurance of a fair and efficient exit in distress situations.

Download the guide here.

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