Uphold Ltd is a Cayman Islands exempted company operating a digital money platform (formerly known as ‘BitReserve’). The Company was founded in 2013 and has over 800 shareholders, including significant institutional and individual investors. The dispute at the heart of this case arose from a funding arrangement entered into in mid-2016 (the 2016 Transaction) involving Adrian Steckel, a director and (through his entities, Uphold Holdings LLC and ASP Capital Sub I Inc) a major shareholder.

The Petitioners were six minority shareholders, led by William Laggner, a former director of the Company. They alleged that Mr Steckel had, through the 2016 Transaction and a series of subsequent actions, gained de facto  control of the Company and caused a dilution of independent shareholders’ interests without their knowledge, consent, or any opportunity to participate.

The Petitioners’ complaints fell into three broad categories. The first was that the 2016 Transaction itself was designed to hand control to Mr Steckel at the expense of other shareholders. The transaction took the form of a revolving credit facility accompanied by a warrant which, upon exercise, gave Mr Steckel’s entity approximately 50 per cent of the Company’s issued shares on a fully diluted basis.

The second concerned subsequent amendments to the revolving credit agreement, in particular the Third Amendment dated May 2017, which permitted the Company to pay interest on the loan by issuing shares to Mr Steckel and Mr James Chen at a fixed (and allegedly artificially low) valuation of US$48 million. This resulted in vast numbers of shares being issued as “PIK interest” without independent shareholders being informed, consulted, or offered the opportunity to participate.

The third was that a valuable corporate opportunity, namely the Company’s UK banking licence application (which ultimately became TBOL plc), was improperly diverted to Mr Anthony Watson, then a director and the Company’s former CEO, in September 2017. Discovery had revealed an undisclosed side agreement pursuant to which Mr Steckel, Mr Thieriot, and Mr Dennings were each to receive personal shareholdings in TBOL.

This was the second winding-up petition brought against the Company. A first petition was filed in February 2021 and settled in June 2021, leading to the establishment of a Litigation Committee chaired by Mr Jim Hilton, an independent director appointed in January 2021. When the current Petition was filed on 14 June 2022, the Petitioners sought either a winding-up order under section 92(e) of the Companies Act (the Act) or, as their primary relief, a buy-out order under section 95(3) of the Act.

Before the matter reached trial, Justice Segal delivered three interlocutory judgments addressing service, the Company’s participation in the proceedings (discussed further in our recent post 'Defanged: Curtailing company participation in winding up proceedings'), and a strike-out application. On the strike-out, Justice Segal dismissed the Respondents’ applications, holding that the Petitioners’ case was not bound to fail and that the disputed factual and credibility issues required a full trial.

The trial took place over three weeks in April and May 2025 and judgment was delivered on 24 March 2026.

By the time of closing submissions at trial, the Petitioners’ case had narrowed significantly from the wide-ranging complaints set out in the Petition. Several allegations were abandoned, including the allegation that a “Steckel Faction” existed and the central contention that Mr Steckel had orchestrated a conspiracy with other directors to gain de facto  control of the Company. The Petitioners’ focus was reduced to two core grounds.

The first was what the judgment terms the “Dilutive Events”: the dilution of minority shareholders through the exercise of the warrant under the 2016 Transaction and, most significantly, the issuing of enormous volumes of PIK interest shares under the Third Amendment to the RCA. The Court noted that dilution had occurred “on a significant scale, on three separate occasions, in circumstances where  [the Petitioners] were not informed of the dilution before it had occurred or offered the opportunity to avoid dilution on terms which were fair.”

The second was what the judgment terms the “Diversion Event”: the alleged improper transfer of the Company’s UK banking licence opportunity to Mr Watson in September 2017, coupled with the undisclosed personal shareholding arrangements for Mr Steckel, Mr Thieriot, and Mr Dennings.

The Petitioners relied on these events to support both a justifiable loss of confidence ground and an oppression ground. They accepted, following the evidence at trial, that they could not challenge the probity of the Litigation Committee itself, but maintained that the Committee’s failure to pursue claims or otherwise remedy the consequences of the earlier misconduct compounded their loss of confidence in the management of the Company’s affairs.

The Petitioners’ late narrowing of their case and the abandonment of serious allegations of dishonesty against named individuals only at the trial stage also drew criticism from the Respondents.

Justice Segal dismissed the Petition in a judgment running to 349 pages.

The applicable legal principles

The Court confirmed that the gateway to alternative relief under section 95(3) of the Companies Act is that the Court must first be satisfied that it would be “just and equitable” to wind up the company, referring to Sir John Chadwick in Camulos Partners Offshore Limited v Kathrein and Company  at [38]. The burden of satisfying that threshold rests on the Petitioners.

On the justifiable loss of confidence ground, the Court applied Loch v John Blackwood Ltd  and Tianrui v China Shanshui Cement, confirming that what is required is “some serious misconduct by those in control of the company which goes to the heart of the relationship between corporators.” The Court held that the misconduct must be “serious, continuing and likely to continue.”

On the question of whether a mere suspicion of misconduct could suffice, Justice Segal held that the Second to Fourth Respondents and the Company were correct that “a mere suspicion of a lack of probity in the conduct of the company’s affairs by those in control of its management is insufficient. There needs to be evidence to show that there has in fact been such a lack of probity.“

On the oppression ground, it was common ground that oppression requires a “visible departure from the standards of fair dealing” and a conscious decision to override or brush aside the interests of the minority, as defined in Re Jermyn Street Turkish Baths Ltd. Justice Segal also referred to the Jersey Court of Appeal’s analysis in Financial Technology Ventures II (Q) LP v ETFS Capital Ltd, noting that “probity” embraces concepts of both honesty and decency, and that a lack of probity or impartiality need not amount to actionable dishonesty.

The 2016 Transaction

The Court found that the Second to Fourth Respondents’ submissions on the 2016 Transaction were “in almost all respects correct.” There was no “Steckel Faction.” The board had entered into the transaction acting in good faith, during a genuine acute cash crisis, and had reasonably believed that no viable alternative existed. Mr Laggner was found to be “an unsatisfactory witness in a number of important respects”.

The PIK interest dilution and the Third Amendment

The Court was more sympathetic to the Petitioners’ complaints regarding the Third Amendment. Justice Segal found that the process by which the Third Amendment was agreed was “wholly inadequate” and that “insufficient independent advice was obtained.” He accepted that the fixed US$48 million valuation was adopted without proper independent assessment of its consequences. The Court found that shareholders had been made aware of the terms on which PIK interest could be paid, noting a shareholder Q&A call in September 2017 and a subsequent complaint by another investor.

The Judge expressed “sympathy with the disappointment felt by many at Mr Steckel’s refusal to give up any part of the substantial windfall” that resulted from the fixed valuation, but ultimately concluded that the repeated failures to observe the requirements of the investor rights agreements, while amounting to poor corporate governance, were “not deliberate or part of a plan to disregard the interests of the Petitioners”.

The TBOL diversion

On the TBOL issue, the Court accepted the evidence of Mr Steckel, Mr Milby, and Mr Hilton that the Company simply could not have taken forward the UK banking licence opportunity itself, given the enormous capital requirements (TBOL had raised over US$120 million by the time it obtained its clearing licence), the regulatory restrictions imposed by the PRA and FCA relating to the Company’s ownership structure, and the practical impossibility of funding the project. The Judge found at [573] that the Litigation Committee’s settlement with Mr Watson, which preserved the Company’s 9.8 per cent interest in TBOL, was “a reasonable commercial settlement that was in the interests of the Company.”

The decisive role of governance reform

The single most significant factor in the Court’s reasoning was what Justice Segal described as the “sea-change” in the Company’s governance since Mr Hilton’s appointment as chairman in April 2021. Mr Hilton was found to be “an impressive witness who gave clear, honest and convincing evidence” and had led “the transformation of the Company’s approach to governance, risk and compliance.” The Litigation Committee, chaired by Mr Hilton, had engaged an independent US law firm to investigate the Petitioners’ complaints as well as taking Cayman Islands legal advice. The Court found that the Committee “acted properly, and adopted a careful and thorough process” and that its decisions were “based on reasonable, realistic and sound legal and commercial decisions.”

The Court held that the Petitioners had failed to show “a real and serious prospect that the conduct of the Company’s affairs will continue to be undertaken with a lack of probity or a lack of impartiality,” and had not shown “any real or serious prospect of the oppressive conduct continuing under the current board.”

The Petition was accordingly dismissed.

This is one of the most substantial trial judgments ever delivered on a just and equitable winding-up petition in the Cayman Islands. Several points stand out for practitioners and for companies.

Governance reform as a shield

The most immediate lesson is that proactive governance reform can serve as an effective answer to a winding-up petition when that petition is grounded in historic misconduct. The appointment of Mr Hilton to the board, the establishment of a properly constituted and independently advised Litigation Committee, and the Company’s belated steps to remedy IRA breaches were plainly decisive in the Court’s analysis. As we noted in our previous post on the Re Seahawk China Dynamic Fund decision, a company facing a winding-up petition may neutralise investigatory complaints by welcoming an open, independent investigation into its affairs. Uphold  provides the clearest example yet of this principle being applied at trial.

The burden is assessed at the date of hearing

The Court confirmed that the just and equitable test is to be applied by reference to the facts as at the date of the hearing of the petition. Even serious past misconduct may not justify a winding-up order if the current board has demonstrably reformed and the oppressive conduct has ceased. Petitioners should be prepared for the risk that remedial action by the company during the pendency of proceedings may undermine their case, even where the underlying complaints have real force.

Oppression requires probity, not merely unfairness

The judgment reinforces that oppression in the Cayman context demands more than commercial unfairness. There must be a visible departure from the standards of fair dealing. The Court was willing to accept that some of the conduct complained of was unfair to minority shareholders, but ultimately concluded that carelessness, poor process, and a failure to obtain proper advice fell short of the want of probity required.

Suspicion alone is not enough

The judgment clarifies that a petitioner cannot rely on mere suspicion of a lack of probity; evidence must be adduced that such a lack of probity actually existed. This narrows the scope of certain earlier statements that had been understood to permit reliance on well-founded suspicions.

The winding-up gateway remains the only route to unfair prejudice relief in the Cayman Islands

As we discussed in our recent post on the UK Supreme Court’s decision in THG Plc v Zedra Trust Company, there is no freestanding unfair prejudice jurisdiction in the Cayman Islands. All such claims must pass through the gateway of section 92(e) of the Companies Act. Even where a company’s past governance has “historically failed to meet acceptable standards” (as the Court expressly acknowledged), minority shareholders may be left without a remedy if the high threshold for a winding-up order is not met.

Petitioners who narrow their case at trial do so at their peril

The Petitioners’ decision to abandon significant parts of their case, including serious allegations of dishonesty against named individuals, only during or after the trial was the subject of sustained criticism from both the Respondents and the Court. The strategic risk of advancing wide-ranging allegations that cannot be sustained under cross-examination, and later abandoning them, may damage overall credibility.

The Litigation Committee model works, but process matters

The judgment provides something close to a playbook for how a Litigation Committee should operate in response to serious shareholder complaints. Mr Hilton’s committee engaged independent external counsel with no prior connection to the Company, gave wide-ranging access to documents (some 50,000 emails), obtained a detailed investigative report, took independent Cayman law advice, and made its decisions on the basis of that advice. While these measures appear to go a step beyond what should be expected, companies facing comparable allegations may consider adopting this approach.

Personal actions to challenge share issuances may be a better fit

As we noted in our post on Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd, the Privy Council has confirmed that shareholders have a personal right to challenge an improper allotment of shares. Given the difficulty of meeting the just and equitable threshold, shareholders whose primary complaint relates to the dilution of their shareholding may, in appropriate cases, be better served by pursuing a personal action against the company rather than bearing the burden of proving grounds for winding up a solvent, going-concern company.