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In Cayman Islands Section 238 litigation – disputes as to the fair value of shares held by shareholders of a company that has been privatised – dissenting shareholders are turning to foreign courts to obtain parallel discovery in support of their claims. In two recent decisions, dissenters have relied on US Section 1782 discovery and letters of request to the Hong Kong Court to seek additional documents in those proceedings.

What are Schemarios? Schemarios are “scheme-scenarios” which form governing rules to establish when a parallel scheme of arrangement is necessary. We believe that the Schemarios will be helpful to practitioners of cross-border restructuring around the world. Our Schemarios illustrate how the operation of the “rule in Gibbs” can be used to distinguish between cases where further steps (in particular, a parallel scheme of arrangement) are likely to be necessary to ensure the practical effectiveness of a cross-border restructuring and those cases where such steps may not strictly be necessary for that purpose.

In the recent case of In the Matter of China Oil Gangran Energy Group Holdings Limited, the Hong Kong High Court - in an obiter dicta judgment - has noted that parallel schemes of arrangement are unnecessary if there is no dissentient creditor action in another jurisdiction which might send a wrecking ball to the scheme.

In the recent English judgment in Tatiana Akhmedova v Farkhad Teimur Ogly Akhmedov & others [2021] EWHC 545 (Fam), a high-profile and long-running divorce case, the English Court examined the requirements for relief to be granted under section 423 of the English Insolvency Act 1986.

In the recent decision of In the Matter of Grand Peace Group Holdings Limited, the Hong Kong Court noted obiter dicta that practitioners should, citing Re Da Yu Financial Holdings Limited, be cognisant that parallel schemes of arrangement in both the company’s place of incorporation and Hong Kong, where the offshore company is listed in Hong Kong, would seem generally to be unnecessary. Parallel schemes could result in an escalation in legal fees which is not in the interests of unsecured creditors.

On 17 May 2021, the BVI Commercial Court handed down its written judgment on a negligence claim concerning a helicopter which crashed into the sea while attempting to land on a superyacht in Norway. Harneys, together with Matthew Reeve and Joseph England of Quadrant Chambers, acted for the successful Claimants (the First Claimant insured and the Second Claimant Insurer). The judgment highlights the technical expertise of the BVI Commercial Court in dealing with specialist areas of law.

In the recent decision of Arnage Holdings Ltd in the Grand Court of the Cayman Islands, Justice Doyle dismissed the plaintiffs’ application for the split trial of certain preliminary issues. The Learned Judge considered Grand Court Rule O33 r 3, r 4(2), and r 7, and correlative parts of the English White Book, and held that certain issues (namely retainer, duty and breach) should not, as requested by the Plaintiffs, be heard at a separate trial in advance of other issues including loss, causation and illegality.

In the recent decision of Re China Resources and Transportation Group Ltd in the Grand Court of the Cayman Islands, Justice Doyle dismissed an application for the appointment of provisional liquidators under s104 of the Companies Act (2021 Revision), on the ground that the petitioner had not established the appointment was necessary to prevent the dissipation or misuse of company assets or to prevent mismanagement or misconduct on the part of the directors, describing the evidence as “flimsy” and little more than assertion. The Court was also concerned that the application did not appear to have the support of any other creditors.

In a highly significant development, on 14 May 2021 Yang Wangming, vice-president of the Supreme People’s Court and Hong Kong Secretary for Justice, Teresa Cheng signed a “record of meeting” implementing an arrangement between the courts of the mainland and the Hong Kong SAR concerning mutual recognition of corporate insolvencies.