Anti-Suit Injunction Allows Winding Up To Proceed In Harmony

In Re Ardent Harmony Fund Inc (In Official Liquidation)(FSD 54 of 2016), Chief Justice Smellie granted an anti-suit injunction restraining the largest creditor of Ardent Harmony Fund Inc (the Fund) from continuing proceedings in the Supreme Court of Barbados in which it had sought a receivership order and the appointment of a bankruptcy trustee over the Fund (the Barbados Proceedings). In his reasons for judgment, the Chief Justice provided a useful examination of the principles which apply to anti-suit injunctions in the insolvency context.

Background

The Fund is a Cayman Islands exempted company which operated as an open ended investment fund. On 26 April 2016, the sole holder of the Fund's voting shares appointed voluntary liquidators to the Fund. As the directors of the Fund were unable to provide a declaration of insolvency, an application was made by a Petition dated 28 April 2016 to bring the voluntary liquidation under the supervision of the Cayman Court. On 10 May 2016, the Court ordered that the liquidation continue under its supervision and appointed Joint Official Liquidators (JOLs) to continue its winding up.

International Tropical Timber Organisation (ITTO) is a Japanese entity, and a member and creditor of the Fund. Subject to the final resolution of its Proof of Debt, ITTO appears to be the Fund's largest creditor, with a claim representing approximately half of the Fund's debt.

The application

Although ITTO had made no objection to the Cayman Islands liquidation proceedings and had not expressed any concern regarding the conduct of the liquidation, it commenced the Barbados Proceedings by a Petition dated 13 May 2016 without notice to the JOLs. ITTO submitted its Proof of Debt in the Cayman Islands liquidation on 19 May 2016.

On 24 May 2016, the JOLs applied without notice to ITTO for an antisuit injunction restraining ITTO from continuing the Barbados Proceedings. In seeking the anti-suit injunction, the JOLs expressed their firm view that nothing had arisen in their investigations to date which suggested there was any need to commence proceedings in Barbados. In particular, the JOLs had not identified any assets or debtors in Barbados, other than the Fund's bank accounts with CIBC FirstCaribbean International Bank, the balances of which had been transferred to accounts opened by the JOLs in the Cayman Islands.

The anti-suit injunction was sought in circumstances where there was a risk that the Barbados Court would appoint...