From New York to Chile and in between: The Cayman Islands court approves protocol for communicating with foreign courts in LATAM Finance restructure
In the 24 August, 2020 decision of Justice Kawaley in Re LATAM Finance Limited, the Grand Court of the Cayman Islands approved a protocol for direct communications between itself and courts in New York, Chile and Colombia in relation to a proposed restructure under Chapter 11 of the United States Bankruptcy Code.
While indirect and informal court to court communication has been a common feature of international insolvency and restructurings with a Cayman Islands element for some time, this is the first occasion that the Cayman Islands court has facilitated direct communication with other courts.
Insolvencies and restructurings that cross jurisdictions are now commonplace. While many jurisdictions have chosen to codify rules for such matters, the Cayman Islands position is more flexibly governed by the common law and founded upon the interrelated concepts of modified universalism (being the desirability that international insolvency or restructuring be administered within a single main proceeding and, where this is impossible, that courts with jurisdiction over ancillary proceedings should render assistance to the court supervising that main proceeding) and comity (being the desirability of reciprocity of cooperation and assistance between courts of different countries).
The American Law Institute/ International Insolvency Institute Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases and the Judicial Insolvency Network Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters (more commonly referred to as the ALI/III Guidelines and the JIN Guidelines) have been administratively approved for use in Cayman court-supervised insolvency and restructuring proceedings by way of a Court practice direction. The guidelines primarily cover the procedural rules that may be adopted and applied for regulating communications between courts, including joint hearings. The starting position in the Cayman Islands is that these are suitable guides to adopt, adapt and apply in cross border matters.
In Re Latam Finance Ltd, the Court approved without controversy the ALI/III Guidelines for use in the proposed restructure. The decision is another example of the continuing commitment of the Cayman Islands to cooperation in cross border insolvencies.