The Cayman Lawyer: Episode one - Liquidation and restructuring options for joint ventures

Welcome to The Cayman Lawyer, a podcast created to help demystify the laws of the Cayman Islands.

In this series, we will help our listeners learn more about the legal landscape, navigate our laws and ensure they have everything they need to know about what the jurisdiction has to offer.

In our first episode, Litigation and Insolvency Partner Katie Pearson and Corporate Partner Matt Taber outline the liquidation and restructuring options that are available to investors in the Cayman Islands joint ventures. 

Key takeaways

  • The Cayman Islands joint venture companies are typically used when you have investors who are in different jurisdictions to the company’s operations, or in different jurisdictions from each other. In the current economic climate, many such companies are unable to meet performance expectations.
  • The liquidation and restructuring options available in Cayman include voluntary liquidation, which is an out-of-court process for solvent companies; official or Court-appointed liquidation, and provisional liquidation, which is commonly used as a restructuring tool.
  • There a number of advantages to a Cayman company entering an insolvency process in Cayman rather than in the place of operations, which include: you get an automatic stay of proceedings, which has a worldwide effect; liquidators appointed in the place of incorporation will find it easier to get recognised overseas than those appointed elsewhere; and Cayman processes are cheaper than those available in some other jurisdictions, particularly if the alternative is a US bankruptcy process.
  • In some cases, we have seen investors in joint venture companies simply walk away from their investments by surrendering their shares. If you are considering this option, it is better to do so before an insolvency process is commenced, as if the company is in liquidation the surrender of shares will require Court approval.

 


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Welcome to The Cayman Lawyer, a podcast created to provide information about the legal landscape in the Cayman Islands. We will be demystifying the jurisdiction by sharing everything you need to know about what the legal jurisdiction has to offer.