A numbers game: How many petitions does it take to appoint receivers to segregated portfolios within an SPC?
In the recent decision of In the Matter of Bo Run SPC, the Grand Court of the Cayman Islands considered whether it was permissible to file a composite petition to appoint receivers to a number of segregated portfolios within a single segregated portfolio company (SPC) as opposed to filing separate petitions for each segregated portfolio. The Grand Court held that there is no mandatory requirement to make separate applications for each segregated portfolio but a petitioner may elect to file separate petitions where it was commercially and legally appropriate to do so.
The petitioner had sought to file a composite petition to appoint receivers to nine segregated portfolios within the SPC, but at the time of filing was informed that separate petitions were needed. This resulted in total filing fees of CI$45,000 for nine petitions. The nine petitions were later directed to be heard concurrently and consolidated. The Court was asked to grant a refund of the filing fees for the additional eight petitions.
After considering the relevant legislation applicable to SPCs and Grand Court Rules, the Grand Court held that there is no statutory requirement to file multiple petitions to appoint receivers to multiple segregated portfolios within the same SPC:
- It is clear from the Companies Act (2023 Revision) (the Act) that a separate petition must be filed for each entity that has its own legal personality and the Act provides that a segregated portfolio can be wound up even if the SPC is not.
- Although a segregated portfolio has no separate legal personality, it is akin to a segment of a business carried on under the ownership of a single company or individual. A receivership order may be made in respect of one or more segregated portfolios, the implication being that the order would be made on one petition.
- The Court was instructed by the provisions in the Act that deal with dissolution of a segregated portfolio following its winding up. Although the Act does not expressly address winding up of a segregated portfolio, the Court’s recent decision in In the Matter of Holt Fund SPC required a separate petition to be filed to wind up each segregated portfolio, but this is to be contrasted with a petition to appoint receivers.
- There may be cases where, because of conflicts of interest or cross-claims between portfolios, that a petitioner may properly elect to file separate petitions in respect of different segregated portfolios.
- The petitioner was therefore entitled to a refund to the filing fees of the additional petitions.
Where a petitioner seeks the appointment of a receiver to multiple segregated portfolios within the same SPC, the petitioner will need to assess on a case-by-case basis whether any commercial and/or legal issues justify separate petitions for each segregated portfolio within the SPC. Cost considerations are not the determining factor.
