Justice Segal released an Outline Ruling in the Cayman Islands case Re Grand T G Gold Holdings Limited, where the Court considered a creditor’s winding-up petition and application for the appointment of provisional liquidators (PLs). The company sought an adjournment of the petition in order to allow it to progress an early stage restructuring.
Segal J found that in light of all the circumstances it would not be appropriate to order a winding-up and he declined to appoint ‘light touch’ PLs to supervise any restructuring. In declining the winding-up order, Segal J seemed to rely on the principles espoused in Re Demaglass Holdings Ltd  BCLC 633, 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 this 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 PLs might negatively impact the proposed restructuring. Instead, Segal J granted a short adjournment which would allow the company to progress its proposed restructuring, while ensuring the Court could review the position in a timely manner to ensure the position of all creditors was protected.
In a similar case before Chief Justice Kawaley in the Bermuda Commercial Court, Up Energy Development Group Limited, Segal J’s ruling was relied upon by the company in an attempt to resist a creditor’s application for the appointment of PLs 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 PLs. Kawaley CJ did not appear to place much weight on Segal J’s ruling, and instead held that the role of PLs in insolvency restructurings was so deeply entrenched in Bermudian insolvency law practice that it was now a legitimate expectation of stakeholders. He went on to state there is a strong starting assumption in favour of the appointment of PLs and it will be a heavy burden to displace. Kawaley CJ appeared to distinguish the position in respect of the weight to be given to the views of the majority of 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 appoint PLs to monitor a restructuring process – which the Court was not obliged to blindly follow.
Justice Segal’s full judgment in Re Grand T G Gold Holdings is 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 PLs can have beyond simply preventing a winding-up. In 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 PLs where a restructuring is proposed.