Guide to Insolvency and Restructuring in the Cayman Islands

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Guide to Insolvency and Restructuring in the Cayman Islands Powered By Docstoc
					Guide to Insolvency and
 in the Cayman Islands

Preface....................................................................................................................................... 1
Frequently Asked Questions ...................................................................................................... 2

Appleby is the longest established law firm in the Cayman Islands. Our success is built on
giving timely, clear and sound advice that reflects an understanding of our clients’ business
needs. We regularly work with – and many of our lawyers come from – the world’s leading
international firms. We aim to provide world-class quality of service and expertise,
combining in-depth knowledge of Cayman Islands laws and regulations with international


1.   Legislation: What legislation is applicable to bankruptcies and reorganisations?

     Corporate insolvency in the Cayman Islands is governed by the Companies Law (2004 Revision).
     The term ‘bankruptcy’ is generally limited in Cayman Islands law to individual insolvency, which is
     governed by the Bankruptcy Law (1997 Revision) and is outside the scope of this work.

     Part V of the Companies Law deals with the winding up of companies, both voluntarily and
     compulsorily. Its provisions are based on those of English Companies Acts prior to the Insolvency Act
     1986. The Cayman Islands follow the UK Insolvency Rules 1986, insofar as they are relevant, and
     with necessary adaptations to suit local circumstances.

     Sections 86 to 88 of the Companies Law deal with reorganizations through schemes of arrangement.

2.   Excluded Entities: What entities are excluded from bankruptcy proceedings and what legislation applies to

     Winding up under the Companies Law is restricted to companies formed and registered in the
     Cayman Islands. It does not extend to partnerships, which are dealt with under the Partnership Law,
     or to individual insolvencies, as noted above.

     While there is no express statutory authority to wind up the business in the Cayman Islands of a
     foreign company, even if the Cayman Islands are its principal place of business, there is judicial
     precedent for doing so where the foreign company is registered in the Cayman Islands as a "foreign
     company" under Part IX of the Companies Law. In the absence of this, proceedings would need to
     be commenced in the company's country of incorporation and the courts of that country would be
     able, as noted below, to request assistance from the courts of the Cayman Islands as required to
     administer the local assets or business. The Cayman courts deal regularly with cross border
     insolvencies and will generally recognise the authority of foreign appointed liquidators to act in respect
     of Cayman assets and will also grant appropriate relief to assist liquidations in other jurisdictions.

3.   Secured Lending and Credit (Immovables): what are the principal types of security devices (e.g.
     mortgages, etc) that are taken on immovable (real) property?

     The principal type of security device taken on immovable (real) property is a charge which is
     registered on the land register.

4.   Secured Lending and Credit (movables): what are the principal types of security devices (e.g. mortgages,
     etc) that are taken on movable (personal) property?

     Devices used for movables include legal and equitable mortgages and charges of securities, ships,
     aircraft and vehicles, hypothecations of cash deposits and legal assignments of things in action.

     A debenture generally creates a fixed charge over certain specified assets (e.g. movable property which
     is not caught by a charge over real estate) which should not be disposed of without the lender’s
     written consent. It creates a floating charge over all the undertaking and all other assets of the
     borrower both present and future such as stock in trade. The borrower would be permitted to dispose
     of such property unless and until the floating charge crystallises as a fixed charge in the event of

     All mortgages and charges made by a Cayman company in respect of its assets should be entered in the
     company’s register of mortgages and charges maintained on the company’s minute book at its
     registered office in the Cayman Islands. The register of mortgages or charges is open to inspection by
     any member or creditor of the company.

5.   Unsecured Credit: What remedies are available to unsecured creditors (e.g. seizures, attachments, judgments,
     etc.)? Are the processes difficult or time consuming? Are pre-judgment attachments available? Do any special
     procedures apply to foreign creditors?

     Apart from the winding up process, unsecured creditors can only recover debts by obtaining and
     enforcing judgment. Interim orders for the preservation of assets (but not for their delivery up) are
     available pending judgment.

     The speed and ease of obtaining judgment against a debtor depends upon the extent to which the
     proceedings are contested.

     If the proceedings are contested, a creditor who is ordinarily resident outside the Cayman Islands may
     be ordered by the court, on an application by the debtor, to give such security for the debtor’s costs of
     the proceedings as the court thinks just.

     Once a judgment has been obtained, it may be enforced by one or more of the following remedies:

            (i)     a writ of fieri facias or of sequestration by which the debtor’s goods are seized and sold;
            (ii)    garnishee proceedings, or attachment of debts;
            (iii)   a charging order over the debtor’s land or securities;
            (iv)    the appointment of a receiver over the debtor’s business or assets;
            (v)     an order attaching the debtor’s earnings; and
            (vi)    an order for the debtor to be committed to prison for willfully refusing to pay the debt.

6.   Courts: What court(s) are involved in the bankruptcy process? Are there restrictions on the matters that the
     court(s) can deal with?

     Corporate insolvency proceedings are brought in the Grand Court of the Cayman Islands. Subject to
     the minimum debt (equivalent to US$120) upon which a creditor’s winding up petition can be
     presented, there is no restriction on the jurisdiction of the Grand Court over the winding up of
     Cayman Islands companies. Aside from the initial hearing of the winding-up petition, the Court has
     extensive powers in connection with winding up proceedings. It hears appeals by creditors and
     contributories against determinations of liquidators and applications by court-appointed liquidators for
     directions. It can order widely defined classes of person to appear for examination, can make orders
     regarding the payment of debts or delivery of property by contributories, and generally controls the
     liquidation process. Appeal lies from the Grand Court to the Court of Appeal of the Cayman Islands
     and from there, with leave, to the Privy Council in England.

7.   Voluntary Liquidations: What are the requirements for a debtor to commence a voluntary liquidation of its
     business? What are the effects of the commencement of the liquidation?

     A voluntary liquidation commences through a resolution of the members. There is no distinction in
     the Cayman Islands between a creditors’ and a members’ voluntary liquidation.

     The effect of such a resolution is that the company ceases to carry on its business except as may be
     required for its beneficial winding-up, and liquidators take over the functions of the directors.
     Subsequent share transfers are void. The voluntary liquidators, the creditors or the members may
     apply to the Grand Court for the voluntary liquidation to continue subject to the supervision of the
     court. Such a court-supervised voluntary liquidation differs in few material respects from a
     compulsory (involuntary) liquidation.

8.   Involuntary liquidations: What are the requirements for creditors to successfully place a debtor in involuntary
     liquidation? What are the effects of the commencement of the

     The principal ground for a creditor’s petition to wind up a company is that it is unable to pay its debts.

     If a winding up order is made all dispositions of the property of the company, and every transfer of
     shares or alteration in the status of the members of the company made between the the date of
     presentation of the petition and the order for winding up are void unless the court otherwise orders.

     In addition, there is an automatic stay of all proceedings against the company, which may not be
     commenced or proceeded with except with the leave of the court. On the making of a winding up
     order, the court will appoint one or more persons to act as official liquidators. There is currently no
     system of licensed insolvency practitioners, but the court will only appoint someone whom it deems
     to be fit and proper to act as official liquidator.

9.   Voluntary Reorganizations: What are the requirements for a debtor to commence a financial reorganization?
     What are the effects of the commencement of the reorganization?

     A debtor has to fulfill no statutory requirements before commencing a financial reorganisation.
     However, if it is to be binding on all the company's creditors or members (as the case may be), it must
     be sanctioned by the court: the company must show that a majority in number and 75% by value of
     the company's creditors or members (as the case may be) agree to the reorganisation at a meeting
     convened by order of the court.
      Where the purpose of the arrangement is the reconstruction of any company or companies or the
      amalgamation of any two or more companies, the court has wide powers to make consequential
      orders for facilitating the scheme, including the transfer of liabilities of the transferor company and
      provision for dissolution of the company without a winding up.

      The scheme becomes effective when a copy of the court order is delivered to the registrar.

10.   Involuntary Reorganizations: What are the requirements for creditors to commence an involuntary
      reorganization? What are the effects of the commencement of the reorganization?

      There is no provision for creditors to commence an “involuntary” reorganization. However, where a
      company under pressure from its creditors wishes to make a composition or agreement which will be
      binding on them, it may apply to the court for sanction: (see 9). Any arrangement entered into
      between a company about to be wound up voluntarily and its creditors is binding on the company if
      sanctioned by a special resolution, and the creditors if acceded to by 75% in number and value of the

11.   Mandatory Commencement of Insolvency Proceedings: Are companies required to commence
      insolvency proceedings in particular circumstances (to avoid personal liability to directors and officers or otherwise)?
      In what circumstances must companies do so? If proceedings are not commenced, what liabilities can result?

      There is no statutory requirement for a company to commence insolvency proceedings in any
      particular circumstances. However, if the directors cause a company to continue to trade whilst it is
      insolvent when there is no reasonable prospect of the company trading out of insolvency they risk
      being held liable personally for breach of their fiduciary duties to the company

12.   Doing Business in Reorganizations: Under what conditions can the debtor carry on business during a
      reorganization? What conditions apply to the use of assets and to creditors who supply goods or services after the
      filing? What are the roles of the creditors and the Court in supervising the debtor’s business activities?

      The Cayman courts have adopted an innovative and flexible approach in dealing with companies
      which wish to trade out of their difficulties or to continue doing business during a reorganization.
      There being no equivalent in Cayman Islands law to the UK’s administration procedure or Chapter
      XI in the US, the Cayman courts have in appropriate cases been prepared to place the company into
      provisional liquidation – ie liquidators are appointed on a provisional basis. This affords the company
      a breathing space in which it can continue to trade (under the watchful eye of the provisional
      liquidators) until such time as a plan/scheme of arrangement can be implemented. Once a scheme of
      arrangement is in force there are no statutory restrictions on the manner in which the company can
      carry on business, though the scheme itself may contain such restrictions; indeed the court may require
      them before approving a scheme. Where a scheme has been sanctioned by the court, creditors bound
      thereby may apply to the court for enforcement of its terms.

13.   Sale of Assets: In (a) a reorganization or (b) a liquidation, what provisions apply to (1) the sale of specific assets
      out of the ordinary course of business and to (2) the sale of the entire business of the debtor?

      In a reorganization the sale of assets or of the entire business will be governed by the terms of the
      scheme of arrangement. In a liquidation by the court the official liquidators have a statutory power,
      with the sanction of the court, to sell the assets or the entire business of the debtor company.
      Voluntary liquidators may without the sanction of the court exercise any powers conferred on official

14.   Stays of Proceedings/moratoria: What prohibitions against the continuation of legal proceedings or the
      enforcement of claims by secured and unsecured creditors are imposed by legislation or court order in (a) liquidations
      and (b) reorganizations? In what circumstances can secured or unsecured creditors obtain relief from such

      When an order has been made for the winding up of a company there is a statutory prohibition on
      any suit, action or other proceeding being proceeded with or commenced against the company except
      with the leave of the court. A creditor may apply for such leave. There is no such automatic stay in
      the case of a voluntary liquidation. In a reorganization there is no prohibition on the continuation or
      commencement of proceedings unless there is a term of the scheme of arrangement to that effect.

15.   Set-off and Netting: To what extent are creditors able to exercise rights of set-off or netting in a liquidation or
      in a reorganization? Can creditors be deprived of the right of set-off either temporarily or permanently?

      It is a statutory requirement in a liquidation that effect be given to rights of set-off or netting. In a
      reorganization creditors could only be deprived of such rights if a scheme of arrangement restricting
      such rights were approved by the requisite majority of creditors and were sanctioned by the Court as
      being fair and sufficiently exceptional to justify such a derogation.

16.   Post-filing Credit: Does your country’s insolvency system allow a debtor in (a) a liquidation or (b) a
      reorganization to obtain secured or unsecured loans or credit? What priority is given to such loans or credit?

      Liquidators are empowered to obtain loans or credit. Any such loan or credit would be an expense of
      the liquidation and would rank in priority to the claims of preferential or unsecured creditors. A
      reorganization would only affect a company’s ability to obtain loans or credit to the extent that a
      scheme of arrangement sanctioned by the court contained any terms relevant to such ability.

17.   Successful Reorganizations: What features are mandatory in a reorganization plan? How are creditors
      classified for purposes of a plan and how is the plan approved?

      The mandatory features include the obtaining of court approval following acceptance of the plan or
      scheme by the creditors/members (see 9). The classification of creditors/shareholders for voting
      purposes is determined by the court.

18.   Expedited reorganizations: Do procedures exist for expedited reorganizations (e.g. “pre-packaged”

      There are no specific provisions permitting expedited reorganizations. However, the court does have a
      discretion to set a short timetable for the convening of meetings of creditors or shareholders and the
      subsequent court hearing for the consideration of a scheme of arrangement. Also, there is jurisdiction
      immediately upon the presentation of a winding up petition to appoint provisional liquidators and to
      restrain any proceedings by creditors against the company pending, for instance, the proposal by the
      company of a scheme of arrangement.

19.   Unsuccessful Reorganizations: How is a proposed reorganization defeated and what is the effect of the plan
      not being approved? What happens if there is default by the debtor in performing an approved plan?

      If the creditors/members or the court do not approve a scheme it never takes effect. The court may
      refuse to sanction even a creditor approved scheme, for example if it believes that the creditors voting
      in favour have acted in a manner which was oppressive to the minority or in bad faith.

      Any party bound by the scheme can apply to be heard by the court in the event of default by the

20.   Bankruptcy Processes: During a bankruptcy case, what notices are given to creditors? What meetings are
      held? What committees are or can be formed? What powers or responsibilities do these committees have? Can
      creditors initiate proceedings to pursue remedies against third parties?

      In a winding up by or under the supervision of the court, after a petition has been presented and
      served on the company, a notice of the hearing of the petition must be advertised in the Cayman
      Islands Gazette so that creditors may have notice of it.

      There is no statutory obligation on the official liquidator once appointed to produce a report on the
      winding up, although he is likely to do so, following the UK practice.

      A Grand Court Practice Direction which took effect from 1 January 2004 provides that in any
      liquidation by or under the supervision of the court a liquidation committee should generally be

      The liquidation committee is responsible for fixing the official liquidator’s remuneration subject to any
      resolution of the creditors or the shareholders (as the case may be) as a whole or any order of the
      court. Otherwise, the function of the liquidation committee or of any meeting of creditors or

      shareholders which the court may direct be held is to ascertain their wishes with regard to the winding
      up with such effect being given to any such wishes as the court may direct.

      When a winding up order has been made, the power to bring proceedings against third parties in the
      name of the company vests in the official liquidator with the sanction of the court. If he fails to pursue
      remedies against third parties, an aggrieved creditor may apply to the court for his removal.

21.   Claims and Appeals: How is a creditor’s claim submitted and what are the applicable time limits? How are
      claims disallowed and how does a creditor appeal a disallowance? Are there any provisions that deal with the
      purchase, sale or transfer of claims against the debtor?

      A creditor is required to submit his claim in writing to the liquidator in the form known as a “proof of
      debt”. The liquidator is entitled to call for further particulars or the production of documentary or
      other evidence in support of the claim. Every creditor must bear the cost of proving his own debt.

      The rules do not provide a particular time limit for creditors to file proofs of debt. This is left to the
      discretion of the liquidator.

      A proof of debt may be admitted for dividend either in whole or in part, or may be rejected, in which
      case the liquidator must send to the creditor a written statement of his reasons.

      A creditor who is dissatisfied with the liquidator’s decision on his proof may apply to the Grand Court
      for the decision to be reversed or varied, within 21 days of the receipt of the liquidator's statement of
      reasons. The court will direct how the matter is to proceed, depending on the extent of factual

      There are no statutory provisions restrictive of the purchase, sale or transfer of claims against the

22.   Priority Claims: What are the major (a) governmental and (b) non-governmental privileged and priority claims
      in liquidations and reorganisations? Which priority and privileged claims have priority over secured creditors?

      Governmental priority claims include all taxes due within 12 months before the date of the winding-
      up resolution or order (defined as "the relevant date").

      Non-governmental priority claims include wages or salary in respect of services rendered to the
      company within a short period of the relevant date and certain qualifying deposits at a licensed bank
      being wound up.

      The above-mentioned governmental and non-governmental priority debts rank equally among
      themselves and are paid pari passu. These debts have priority over the claims of debenture holders
      under any floating charge created by the company and are to be discharged forthwith, subject to the
      retention of funds for the costs and expenses of the winding up.

23.   Distributions: How and when are distributions made to creditors in liquidations and reorganisations?

      Before declaring a dividend, the liquidator must give notice of his intention to do so to all creditors
      whose addresses are known to him and who have not proved their debts and must state in the notice
      his intention to declare a dividend within the period of 4 months from the last date for proving
      specified by him. The liquidator may not declare the dividend so long as there is pending any
      application to the court to reverse or vary a decision of his on a proof, or to expunge a proof, or to
      reduce the amount claimed, except with the leave of the court. Thereafter, the liquidator gives notice
      of the dividend to all creditors who have proved their debts, setting out (inter alia) the total amount to
      be distributed, the rate of dividend, and whether and if so when any further dividend is expected to be

      In a reorganisation pursuant to a scheme of arrangement (see 9) any distribution to creditors will take
      place in accordance with the terms of the scheme.

24.   Voidable Transactions: (a) What types of transactions can be annulled or set aside in bankruptcies and what
      are the grounds? What is the result of a transaction being annulled? (b) Does your country use the concept of a
      “Suspect Period” in determining whether a transaction by an insolvent debtor can be annulled? (If so, how is the
      Suspect Period established?) Can voidable transactions be attacked by secured creditors or by unsecured creditors or
      only by a Liquidator or Trustee? Can they be attacked in a reorganization or suspension of payments or only in a

      When any company is being wound up by the court or subject to the supervision of the court, all
      dispositions of the property of the company and every transfer of shares in the company made between
      the date of presentation of the petition and the order for winding up are void, unless the court orders

      In addition, any dealing with the property of the company within 6 months before the
      commencement of a winding up which was done in favour of any creditor, with a view to giving
      such creditor a preference over the other creditors can be set aside by the court on the application of
      the liquidator.

      The Fraudulent Dispositions Law (1996 Revision) (which applies generally and is not dependant on
      there being a liquidation or a reorganisation) also provides that every disposition of property made
      with an intent to defeat an obligation to a creditor and at an undervalue is voidable on the application
      of a creditor thereby prejudiced made within 6 years of the date of the disposition. Such a disposition
      could be set-aside only to the extent necessary to satisfy the obligation to the applying creditor
      together with costs at the court's discretion. In addition, if the court is satisfied that the transferee has
      not acted in bad faith, the disposition will be set aside subject to the proper fees, costs, pre-existing
      rights, claims and interests of the transferee.

25.   Directors and Officers: (a) Are corporate officers and directors liable for or can they be made to pay
      obligations owed by their corporations (e.g., amounts owed to Government authorities)? (b) Do corporate officers
      and directors have any liability for pre-bankruptcy actions by their companies? Can they be made subject to
      sanctions or penalties for other reasons?

      a. There are no statutory provisions providing for such a liability consequential on the liquidation or
         reorganization of a company.

      b. There are no express statutory provisions in respect of fraudulent or wrongful trading by directors
         and officers. Directors do not expose themselves to personal liability merely by causing the
         company to break its contractual obligations, for example, in order to assist the company in trading
         out of its financial difficulties. However, failure to wind up a company as soon as they become
         aware that the company is insolvent and that it will not be able to trade out of its difficulties, may
         expose directors to a claim for misfeasance or breach of trust by any official liquidator, creditor or
         contributory of the company. In addition where in the course of the winding up of a company it
         appears that any director or officer of the company has misapplied or retained in his own hands or
         become liable or accountable for any money of the company, the court may compel him to repay
         such moneys or to contribute such money to the assets of the company by way of compensation as
         the court thinks just.

26.   Creditors’ Enforcement: Are there processes by which some or all of the assets of a business can be seized
      outside of Court proceedings? How are these processes carried out?

      Creditors may enforce certain proprietary and contractual rights without an application to the court
      e.g. pursuant to hire purchase agreements, retention of title clauses, security documentation or, in the
      case of a landlord, a right to levy distress.

27.   Corporate Procedures: Are there corporate procedures for the liquidation or dissolution of a corporation? How
      do such processes contrast with bankruptcy proceedings?

      Other than by winding up by or subject to the supervision of the court, or voluntarily (see 7 and 8) a
      company can be struck off the register and dissolved by administrative action.

      The Registrar may, if he has reasonable cause to believe that a company is not carrying on business or
      is not in operation, strike its name from the register, whereupon it is deemed dissolved. The company
      can itself request this.

      Any assets belonging to the company when it is struck off vest in the Crown for the benefit of the
      Cayman Islands. The company or any shareholder or creditor may apply to the courts within, in most
      cases, two years of the striking off for the reinstatement of the company.

      The main advantage of this administrative method of dissolution is that it is relatively simple and
      inexpensive. The main disadvantage is that there is no control over its timing, which is in the hands of
      the registrar. Also, this method cannot be used where the company has outstanding unsatisfied
      liabilities (although non-payment of the government fees may result in the registrar striking the
      company off in due course in any event).
28.   Conclusion of Case: How are liquidation and reorganisation cases formally concluded?

      In a winding up by or subject to the supervision of the court, there are
      two methods for concluding the liquidation:

      (i)     When the affairs of the company have been completely wound up, the
              official liquidator can apply for an order that the company be dissolved.

      (ii)    Alternatively the liquidator may simply notify the registrar that the affairs of the company are
              fully wound up. The registrar may then strike the company off the register and the company is
              dissolved. Such a dissolution may be reversed by the court on application by the company
              itself, any member or creditor who is aggrieved by it.

      In a voluntary winding up, once the affairs of the company are fully wound up, the liquidator must
      make a report showing how the winding up has been conducted, account for the disposal of the
      company's property and call a general meeting of the shareholders of the company to lay the report
      before them. Following such meeting the liquidator makes a return to the registrar of the holding of
      the meeting. Three months from the date of registration of this return the company is deemed to be

      A reorganization effected through a scheme of arrangement is concluded in such a manner as is
      provided for under the terms of the scheme.

29.   UNCITRAL Model Law: Is the adoption of the UNCITRAL Model Law on Cross-Border Insolvency
      under consideration in your country? If so, what is the present status of this consideration?

      The adoption of the UNCITRAL Model Law is not under consideration but its theme of
      international co-operation is reflected in proposed new Companies legislation currently being
      formulated by the leading insolvency professionals in the Cayman Islands.

30.   International Cases: What recognition or relief is available concerning an insolvency proceeding in another
      country? How are foreign creditors dealt with in liquidations and reorganisations? Are foreign judgments or orders
      recognised and in what circumstances? Is your country a signatory to a treaty on international insolvency or on the
      recognition of foreign judgments?

      The court may recognise a liquidator appointed by a foreign court for the purposes of bringing
      proceedings in the Cayman Islands if there is a sufficient connection between the company and the
      foreign jurisdiction by which he was appointed.

      The Cayman Islands are not a signatory to any treaties on international insolvency. However, in
      international and cross border insolvency proceedings relating to BCCI (Overseas) Ltd. the Grand
      Court exercised its discretion to order that a committee of creditors should be established in the
      Cayman Islands to bring the liquidation of the company into line with similar proceedings in other
      jurisdictions. In a winding up in the Cayman Islands, no distinction is drawn between domestic and
      foreign creditors.

      The Grand Court is entitled to request assistance in matters of insolvency from courts having
      jurisdiction in insolvency in any part of the United Kingdom. This procedure has been successfully
      invoked on a number of occasions.

      The Cayman Islands have enacted a Foreign Judgments Reciprocal Enforcement Law, which provides
      for the registration of foreign judgments in the Cayman Islands. However, this Law has so far only
      been extended to certain states and territories of Australia. Consequently, the recognition and
      enforcement of foreign judgments are determined according to the common law principles including
      in particular whether the foreign court had jurisdiction according to Cayman Islands Law.

31.   Cross-Border Insolvency Protocols and Joint Court Hearings: In cross-border cases, have the
      Courts in your country entered into Cross-Border Insolvency Protocols or other arrangements to coordinate
      proceedings with Courts in other countries? Have Courts in your country communicated with or held joint hearings
      with Courts in other countries in cross-border cases? If so, with which other countries?

      The Grand Court has authorised cross-border protocols in relation, for example, to the pooling of
      assets and the sharing of information and costs. It has also made orders placing companies into
      provisional liquidation in order to facilitate their re-structuring through, for instance, Chapter 11
      proceedings in the US. On occasion the Grand Court has communicated with or held joint hearings
      with courts in other countries including England, USA and Luxembourg.

32.   Pending legislation: Is there any new or pending legislation affecting domestic bankruptcy procedures,
      international bankruptcy cooperation or recognition of foreign judgments and orders?

      Legislation in a preliminary draft form for a new Part V of the Companies Law and an entirely new
      Part XVI on international co-operation is under discussion by leading insolvency professionals in the
      Cayman Islands. The draft legislation is intended to continue the tradition of the Cayman Islands as a
      creditor friendly jurisdiction and to enhance the court’s jurisdiction on international co-operation.
      The proposed amendments to Part V which are being considered include inter alia provisions dealing
      with the establishment of liquidation committees, the fixing of liquidators’ remuneration, statutory
      liability for fraudulent trading, company voluntary arrangements, an Insolvency Rules committee and
      requirements that official liquidators be qualified insolvency practitioners and that all voluntary
      liquidations be brought under court supervision unless the company is deemed to be solvent. It is also
      being proposed that the court would have jurisdiction to wind up foreign companies. The proposed
      new Part XVI would also expressly empower the court to make various orders ancillary to a foreign
      bankruptcy proceeding on the application of a trustee appointed in such a foreign proceeding.

33.   Developments under the E.U. Regulation on Insolvency Proceedings: Please comment on any
      significant developments or recent decisions in your country involving the E.U. Regulation on Insolvency

      This Regulation is not applicable in the Cayman Islands.

For more specific advice on insolvency and restructuring in the Cayman Islands, we invite
you to contact the following in the Litigation and Insolvency Practice Group:

                                                                                    Andrew Bolton
                                                          Partner, Group Head: Litigation and Insolvency

                                                                         Jeremy Walton ACIArb
                                                                         Partner, Litigation & Insolvency

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purport to be comprehensive or to provide legal advice. No person should act in reliance on any
statement contained in this publication without first obtaining specific professional advice.

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