Offshore Litigation

Blog

Offshore Litigation

Contributors

Jonathan Addo
Jonathan Addo
  • Jonathan Addo

  • Partner
  • British Virgin Islands
Jeremy Child
Jeremy Child
  • Jeremy Child

  • Partner
  • London
Julie Engwirda
Julie Engwirda
  • Julie Engwirda

  • Partner
  • Hong Kong
Peter Ferrer
Peter Ferrer
  • Peter Ferrer

  • Partner
  • British Virgin Islands
Claire Goldstein
Claire Goldstein
  • Claire Goldstein

  • Partner
  • British Virgin Islands
Hazel-Ann Hannaway
Hazel-Ann Hannaway
  • Hazel-Ann Hannaway

  • Partner
  • British Virgin Islands
Nick Hoffman
Nick Hoffman
  • Nick Hoffman

  • Partner
  • Cayman Islands
Andrew Johnstone
Andrew Johnstone
  • Andrew Johnstone

  • Partner
  • Hong Kong
Paula Kay
Paula Kay
  • Paula Kay

  • Partner
  • Hong Kong
Phillip Kite
Phillip Kite
  • Phillip Kite

  • Partner
  • British Virgin Islands
Vicky Lord
Vicky Lord
  • Vicky Lord

  • Partner
  • Shanghai
Paul Madden
Paul Madden
  • Paul Madden

  • Partner
  • Cayman Islands
Henry Mander
Henry Mander
  • Henry Mander

  • Partner
  • Cayman Islands
Ian Mann
Ian Mann
  • Ian Mann

  • Partner
  • Hong Kong
William Peake
William Peake
  • William Peake

  • Partner
  • London
Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

  • Consultant
  • Hong Kong
Chai Ridgers
Chai Ridgers
  • Chai Ridgers

  • Partner
  • Hong Kong
Nicola Roberts
Nicola Roberts
  • Nicola Roberts

  • Partner
  • Hong Kong
  • Singapore
Paul Smith
Paul Smith
  • Paul Smith

  • Partner
  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

  • Partner
  • British Virgin Islands
Jessica Williams
Jessica Williams
  • Jessica Williams

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

  • Partner
  • Cayman Islands

Payment of Liquidation Fees: Pacific Harbor Asia Fund I, Ltd.

The Grand Court of the Cayman Islands delivered its decision in the matter of Pacific Harbor Asia Fund I, Ltd on the scope of its jurisdiction regarding payment of liquidation fees under insolvency laws.

It concerned a Master Fund structure comprising (i) the Company, as offshore feeder fund; (ii) a Delaware feeder fund; and (iii) the Master Fund (a Cayman Islands Limited Partnership). The feeder funds were limited partners of the Master Fund, holding 77% and 23% interests respectively. The Company’s main asset was this 77% interest.

The Master Fund made investments in distressed debt obligations that became problematic to recover and JOLs were required to realise its assets on behalf of the Company. Due to a difference in opinion amongst stakeholders, the Court appointed two individuals from different firms as JOLs of the Company; Mr Griffin of FTI Consulting and Mr Lai of Deloitte. Whilst they followed court instructions to agree responsibilities and protocol, they were unable to reach agreement as to the costs of the liquidation, which was further compounded by the fact that Mr Griffin had already acted as Voluntary Liquidator.

The issue for the Court was whether Mr Lai should be paid out of the assets of the Master Fund (which wasn’t in liquidation) or the Company. It was submitted that the realisation of the Master Fund’s assets was part of the liquidation of the Company. Paying Mr Lai out of the Master Fund’s assets would mean that he would be paid before the JVLs, which contravened the provision for priority under the CWR and the Companies Law (2016 Revision).

The Court held that it did not have jurisdiction to vary priority of payments laid down by law. Because the Master Fund was a separate exempted limited partnership that was not in liquidation, it could not treat it under the liquidation regime. Accordingly, the Company had to pay Mr Lai’s fees.

Read more about the decision here

Currency

Leave A Comment