We previously reported on the case of Natural Dairy (NZ) Holdings (FSD 186 of 2016) (NSJ) in relation to substitution of the petitioner and on the matter as to costs.
The Grand Court recently released another unreported judgment amending the powers of the joint provisional liquidators’ (JPLs) and granting them full powers. Harneys persuaded the Court that in order for the JPLs to carry out the tasks for which they were appointed (investigating possible mismanagement and misconduct by the management and to prepare and proceed with a resumption proposal – the JPL Tasks), the JPLs needed full and unfettered powers over all the assets of the Company and “the retention of residual powers by the Company’s directors was seriously unhelpful and damaging to the ability of the JPLs to perform their functions and also has resulted in confusion, complications, additional work and unnecessary delays and costs.”
In reaching his decision, Justice Segal observed that “once the statutory pre-conditions for the appointment of provisional liquidators are established the Court has a discretion to grant the provisional liquidators such powers as the Court considers necessary and appropriate to prevent such dissipation, misuse, mismanagement and misconduct and to ensure that the Company’s assets are properly protected pending the hearing of the winding-up petition”. Justice Segal saw no reason why the precise extent of the powers could not be adjusted and extended to respond to particular problems and needs identified by the provisional liquidators and the changing circumstances, which illustrates again that the Cayman Islands provisional liquidator is a powerful and flexible tool in the rehabilitation of Cayman companies.