In a welcome Practice Direction on 30 July 2018, the Cayman Islands adopted the use of the JIN Guidelines (defined below) in cross border insolvency and restructuring cases (joining Bermuda and the BVI) and the use of the American Law Institute (ALI) / International Insolvency Institute (III) Guidelines Applicable to Court to-Court Communications in Cross-Border Cases (the American Guidelines).
In October 2016, judges from 10 different jurisdictions, including the Cayman Islands, met in Singapore for the inaugural Judicial Insolvency Network Conference. The result was the Judicial Insolvency Network Guidelines for Cooperation in Cross-Border Insolvency Matters (the JIN Guidelines). The JIN Guidelines were designed primarily to enhance communication between courts, insolvency representatives and other parties in the context of global restructurings and insolvency.
The American Guidelines were developed from the Transnational Insolvency Project (1993-2000) led by the ALI and the III “to provide a nonstatutory basis for cooperation in international insolvency cases involving two or more of the NAFTA states’’. The project was led by judges, lawyers and academics from the NAFTA countries.
Both Guidelines aim to enhance coordination and harmonisation of cross-border insolvency proceedings and, whilst there are differences, are broadly similar.
Applying and Incorporating the Guidelines
The Guidelines apply to insolvency or restructuring proceedings that are supervised by, or involve related applications to, courts in more than one jurisdiction. This includes schemes of arrangement relating to a company being supervised by the Grand Court that also involve a parallel scheme or ancillary proceedings in another jurisdiction.
Cayman Islands appointed officeholders should now consider, at the earliest opportunity, whether to incorporate some or all of the Guidelines with suitable modifications either through an international protocol approved by the Grand Court, or by an order of the Grand Court. Order 21 of the Companies Winding Up Rules already imposes a duty on official liquidators (appointed under Part V of the Companies Law (2018 Revision)) to consider whether it is appropriate to enter into an international protocol with a foreign officeholder.
The long awaited introduction of cross border communication and co-operation guidelines in the Cayman Islands has brought the Cayman Islands to the forefront of the global stage, providing its officeholders with flexibility whilst maintaining the integrity of its judicial system.