“Light touch” provisional liquidators appointed across three jurisdictions in the restructuring of the Century Sunshine Group: the JIN guidelines in practice?
In the recent judgments of Justice Parker in the Cayman Islands, Chief Justice Hargun in Bermuda and Justice Jack in the British Virgin Islands, “light touch” provisional liquidators were appointed across Century Sunshine Group Holdings Limited (the Company) and group companies. This is one of the first cases where provisional liquidators were appointed across three jurisdictions in a coordinated manner with the aim of enabling a holistic restructuring of the group. It will stand as an interesting case where the JIN guidelines can be implemented to enhance communications between Courts to facilitate a coordinated restructuring.
On 14 July 2020, “light touch” provisional liquidators were appointed to the Company, a Cayman Islands company listed on the main board of the Hong Kong Stock Exchange. The Company had defaulted on certain bonds that were guaranteed by various subsidiaries in the British Virgin Islands, which would trigger cross-defaults in other debt instruments across the group. In addition, Rare Earth Magnesium Technology Group Holdings Limited, a subsidiary of the Company incorporated in Bermuda, which is also listed on the main board of the Hong Kong Stock Exchange, was additionally in danger of defaulting on its own debts. To effect a group-wide restructuring, “light touch” provisional liquidators were appointed to the Company with a view to similar appointments being made to subsidiaries in Bermuda and in the British Virgin Islands.
Throughout the process of the appointment of provisional liquidators, each of the Courts in the Cayman Islands, Bermuda and the British Virgin Islands were informed of the Company’s plans for the holistic restructuring and kept appraised of the progress of the proceedings in the other jurisdictions. It is envisaged that the implementation of the JIN guidelines will simplify communications between the Courts, as well as rendering the proceedings more time efficient and cost-effective.
This case will be closely watched by the Courts and practitioners alike as a benchmark for its effectiveness in cross-border restructuring cases. Whilst the details of the protocol under the framework of the JIN guidelines remains to be seen, a case that seeks to utilise the flexibility and realise the benefits and potential of this resource will be a welcome step for cross-border restructurings.
Harneys acted for the Century Sunshine Group in appointing the provisional liquidators. Bermuda law advice was provided through Zuill & Co., an independent Bermudian law firm in exclusive association with Harneys.