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Offshore Litigation Blog

Newspaper rolled up as a megaphone

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Cayman Islands Court considers when a secured creditor can sue debtor company in liquidation
In the recent decision of Re Adenium Energy Capital, Ltd. (In Official Liquidation), the Grand Court of the Cayman Islands considered the circumstances in which its permission was required for the pursuit of legal proceedings against a company in liquidation.
Riding the waves of recognition
Two recent Hong Kong liquidation cases applied for recognition and assistance in Mainland China under the Mutual Recognition and Assistance related to Insolvency Proceedings between the Courts of the People’s Republic of China and the Hong Kong SAR (the Cooperation Mechanism). Harneys reported on the unveiling of the Cooperation Mechanism on 14 May 2021.
English High Court follows BVI case, Lau v Chu, to confirm the test for just and equitable winding up
In the recent decision in Re Klimvest Plc [2022] EWHC 596 (Ch), HHJ Cawson QC, sitting as a Judge of the English High Court, ordered that the respondent company, Klimvest, be wound up on just and equitable grounds pursuant to section 122(1)(g) of the Insolvency Act 1986. In his judgment, he drew heavily on the Privy Council case of Lau v Chu [2020] UKPC 24, which reinstated the BVI Commercial Court’s first instance decision and endorsed the initial findings of Justice Kaye.
Missed understanding: BVI Court holds directors in breach of their duty to act for a proper purpose
On 17 January 2022, the BVI Commercial Court handed down judgment in Green Elite (In liquidation) v Fang Ankong et al, in which a claim for breach of directors’ duties was brought by the liquidators of Green Elite against the former directors of that company. The Court held that the directors breached the requirement under section 121 of the BVI BCA to carry out their duties for a proper purpose with the result that they were liable in restitution for certain sale proceeds received by them.
AHAB v Saad – Judgment delivered on AHAB’s appeal
The Cayman Islands Court of Appeal (CICA) has handed down its long-awaited judgment in the landmark case of AHAB v SICL & Others. In the latest chapter of the Saad story, the CICA overwhelmingly endorsed the Chief Justice’s Grand Court decision to dismiss AHAB’s claims, finding in favour of the Defendants / Respondents on the majority of the key issues, in particular the issues of knowledge and authority on the part of the plaintiffs of what was described at first instance as a “cauldron of a fraud”. Harneys acts for the Joint Official Liquidators of SIFCo5.
BVI decrypts the legal status of cryptoassets
In Philip Smith and Jason Kardachi (in their capacity as joint liquidators) v Torque Group Holdings Limited, the BVI Commercial Court had to determine how cryptoassets should be characterised under BVI law and it also had to consider how such assets should be treated by a liquidator in an insolvent winding up.
The Rule in Prudential clarified: The Privy Council decision in Primeo v Bank of Bermuda
On 9 August 2021, the Judicial Committee of the Privy Council handed down its judgment in Primeo Fund (in Official Liquidation) v Bank of Bermuda (Cayman) Ltd and another, on appeal from the Cayman Islands Court of Appeal.
Grand Court asked to choose one liquidator over another
In the recent decision of Re Adamas Heracles Multi Strategy Fund, FSD No 133 of 2021, the Grand Court was asked to rule as to the identity of proposed liquidators; not on the ground of alleged suitability, but because of an alleged undesirability of having the same liquidators appointed over affiliated companies – by reason of conflict.
BVI Court has the power
In the recent decision of the BVI Commercial Court in Hydro Energy v Zhaoheng, the Court continued the appointment of provisional liquidators and refused to stay the underlying application to wind up a BVI company on just and equitable grounds, notwithstanding that the applicant had already commenced arbitration proceedings in Hong Kong pursuant to which interim relief had already been granted.
Protecting Cayman Islands Companies at Risk: Provisional Liquidation
The appointment of provisional liquidators over a company is a powerful weapon in the armoury of the Cayman Islands Courts to protect a company at risk. If appointed, professional insolvency practitioners will take control of the company pending the hearing of a petition to wind up the company. But it is a weapon that may have serious adverse consequences for a company, both as to its commercial operations and business reputation. For this reason, the requirements for, and the circumstances in which, such an appointment may be made are closely circumscribed by the Cayman legislation and case law.
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