Liam Faulkner, a Partner in our Cayman Islands’ Insolvency & Restructuring team, provides an overview of the past year including the insolvency statistics, the restructuring case of the year, a summary of the key judgments and the legislative amendments to be enacted in 2022.
In Kuwait Ports Authority & Another v. Port Link GP Ltd. & Ors (FSD 236 of 2020, unreported, 25 November 2021, Parker J) the Grand Court considered – for the first time in the Cayman Islands – the applicable test governing derivative claims by a limited partner on behalf of an exempted limited partnership under section 33(3) of the Exempted Limited Partnership Act (2021 Revision).
Following years of discussion, the bill for the long awaited proposed amendments to the Cayman Islands Companies Act, providing for a standalone restructuring regime for companies, was gazetted last week.
In a recent judgment in In the matter of Padma Fund LP, Parker J held that the Court does not have jurisdiction to make a winding up order against an exempted limited partnership on a creditor’s petition and that the remedy of a creditor is to commence proceedings against the general partner for an unpaid debt.
The Cayman court has recently dismissed two unrelated applications to appoint JPLs pending the determination of a just and equitable winding up petition alleging a loss of trust and confidence in management. Liam Faulkner discusses these two cases and the hurdles that any applicant must jump on a PL application.
In a significant judgment delivered on 9 August 2021 in the long-running litigation between Primeo Fund (in Official Liquidation) and HSBC, the Privy Council granted the first limb of Primeo’s bifurcated appeal against the lower courts’ dismissal of its claims on the grounds of reflective loss. The decision further narrows the reflective loss principle in important respects following the UK Supreme Court decision in Sevilleja v Marex Financial Ltd last year.
The Data Protection Act, 2021 (the “Act”) was brought into force in the BVI with immediate effect on 9 July 2021 and introduces, for the first time in the British Virgin Islands, a legislative framework for data protection based on a set of internationally recognised privacy principles.
The Act provides that its objects are to:
– safeguard personal data processed by public bodies and private bodies by balancing the necessity of processing the personal data and protecting personal data from unlawful processing; and
– promote transparency and accountability in the processing of personal data.
In line with ongoing commitments given by the Cayman Islands, regulations came into force in the Cayman Islands on 30 June 2021, expanding the categories of entities that are now in scope for the purposes of the Economic Substance regime to all types of partnerships (including general partnerships, exempted limited partnerships and foreign limited partnerships).
In a recent judgment in the liquidation of Herald Fund SPC, an insolvent Madoff feeder fund, the Grand Court addressed the extent to which official liquidators are required to seek the approval or tacit support of the Liquidation Committee when defining the scope of their operational functions and, consequentially, incurring liquidation costs and expenses.
Successful litigants in foreign proceedings will often be required to take steps to enforce any judgment or order obtained outside of the jurisdiction in which it was made. The Grand Court of the Cayman Islands routinely recognises and enforces foreign judgments and arbitral awards from countries such as the United States, the United Kingdom, Singapore, Hong Kong and the PRC (amongst others) against individuals, entities and assets domiciled or situated in the Cayman Islands.