Cayman Islands Court facilitates restructuring opportunity for company facing an imminent Hong Kong insolvency winding up order
In Sun Cheong Creative Development Holdings, the Cayman Islands Court appointed "light touch" restructuring provisional liquidators to the company despite there being competing winding up proceedings against the company in Hong Kong.
The company was a Cayman Islands incorporated company listed on the Hong Kong Stock Exchange that was the holding company of a group operating in the PRC. A creditor of the company had commenced winding up proceedings in Hong Kong and, as the debt was not disputed by the company, the petitioning creditor would ordinarily be entitled to a winding up order. An order for the winding up of the company appeared imminent at the time that the company applied to the Cayman Islands Court for the appointment of provisional liquidators so it could attempt a restructure of its debts.
The Court confirmed that, in considering whether the Cayman Islands or Hong Kong was the more appropriate jurisdiction to assume the role of supervising the primary insolvency proceeding, the starting position is that the place of incorporation will be the more appropriate: this is typically the jurisdiction that the company’s stakeholders legitimately expect to govern the company’s internal affairs. A foreign jurisdiction may be more appropriate where there is a particularly strong nexus between that jurisdiction and the company.