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Jonathan Addo
Jonathan Addo
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Jeremy Child
Jeremy Child
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Julie Engwirda
Julie Engwirda
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Peter Ferrer
Peter Ferrer
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Claire Goldstein
Claire Goldstein
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Hazel-Ann Hannaway
Hazel-Ann Hannaway
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Nick Hoffman
Nick Hoffman
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Andrew Johnstone
Andrew Johnstone
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Paula Kay
Paula Kay
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Phillip Kite
Phillip Kite
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Vicky Lord
Vicky Lord
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Paul Madden
Paul Madden
  • Paul Madden

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Henry Mander
Henry Mander
  • Henry Mander

  • Partner
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Ian Mann
Ian Mann
  • Ian Mann

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William Peake
William Peake
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Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

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Chai Ridgers
Chai Ridgers
  • Chai Ridgers

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Nicola Roberts
Nicola Roberts
  • Nicola Roberts

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Paul Smith
Paul Smith
  • Paul Smith

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  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

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Jessica Williams
Jessica Williams
  • Jessica Williams

  • Partner
  • Cayman Islands
Jayson Wood
Jayson Wood
  • Jayson Wood

  • Partner
  • Cayman Islands

Food for thought: Is it time for a dedicated “restructuring officer” in Cayman Islands law?

Section 104(3) of the Cayman Islands Companies Law allows the appointment of provisional liquidators in circumstances where a company is or is likely to become unable to pay its debts and intends to propose a compromise or arrangement to its creditors. 

This is a well-established and effective company-driven restructuring tool with which Cayman Islands companies can be rehabilitated. The tool may be said to be deficient in three ways:

  1. In order to appoint a restructuring PL, it is procedurally necessary to file a winding up petition.  This is because the Cayman Islands restructuring PL regime was historically born out of the common law (see Mr Justice Harman’s ingenuity in Re English and American Insurance Co. Ltd [1994] 1 BCLC 649; adroitly adopted by Chief Justice Smellie in Re Fruit of the Loom Ltd (unreported, Grand Court, 30 October 2000)) and was later enshrined in the Companies Law with as little fuss as possible.  But for this historical anachronism, there can be no good reason in principle to require a winding up petition to be filed, with all the rancour this creates.

  2. Only the company can move a section 104(3) application, not creditors.  The position is quite different in Bermuda where creditors can drive the restructuring PL process (see In The Matter Of Titan Petrochemicals Limited [2013] SC (Bda) 74 Com).  There is no forensically sound basis for this limitation.

  3. In the Matter of China Shanshui Cement Group Limited (Unreported, 25 November 2015) it was held that the board of directors does not have authority to petition the Court to wind up the company, a necessary pre-cursor to a restructuring provisional liquidator appointment, without shareholder approval, unless the articles of association of the company expressly provide otherwise.  This was the right decision on a strict interpretation of the Companies Law.  However, it offends against the accepted rule in Re Rica Gold Washing Co (1879) 11 Ch D 36 that: those without an economic interest in the outcome of a winding up, namely shareholders in an insolvent company, should stay out of it.

Consistent with our status as a creditor friendly jurisdiction, is it now time for an overhaul of the section 104(3) tool to create a dedicated “restructuring officer”?

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