Cayman Court Fills In The Gaps To Supervise Voluntary Liquidation Of ELP

Published date21 February 2023
Subject MatterFinance and Banking, Corporate/Commercial Law, Financial Services, Corporate and Company Law
Law FirmWalkers
AuthorWalkers &nbsp

The Grand Court of the Cayman Islands handed down a recent decision in the case of In the Matter of ECM Straits Fund I, LP1 providing helpful guidance to practitioners on the wide discretion granted to the Court by the provisions of the Exempted Limited Partnership Act (the "ELP Act") in relation to the appointment and replacement of liquidators of exempted limited partnerships ("ELPs") in voluntary liquidations and the power of the Court to supervise such liquidations.

Parker J held that the powers of the Court in relation to ELPs in voluntary liquidation were analogous with the Court's powers to make orders and directions in making supervision orders in respect of companies in voluntary liquidation. The Court recognised the necessity to "fill in gaps" left by section 36(3)(d) of the ELP Act which, with very limited savings, disapplies the application of the Companies Act winding-up provisions to voluntary liquidations of an ELP.


ECM Straits Fund I, L.P. (the "Partnership") was registered as a Cayman Islands ELP pursuant to section 9(1) of the ELP Act.

Since the Partnership's term expired, the liquidation had made little progress and it appeared that the Partnership had effectively been abandoned by its general partner (the "GP"). The GP was struck off the register on 29 July 2022. As the GP was no longer acting, the only known limited partner (the "Applicant") sought the appointment of independent liquidators to replace the GP to wind up the Partnership and to conduct investigations into the Partnership's affairs.

Jurisdiction to bring voluntary liquidation of partnership under supervision of the Court and to grant powers to liquidators

There is no express mechanism in the ELP Act for bringing a voluntary winding of an ELP under the supervision of the Court. Section 36(3)(d) of the ELP Act disapplies the majority of Part V of the Companies Act to the voluntary liquidation of an ELP including the applications by a liquidator of a company being wound up voluntarily for a supervision order of the Court (sections 124, 131, 132 and 133 of the Companies Act).

The Court noted that section 36(3)(g) had been considered by Kawaley J in In Re Xio Diamond Ltd2 where Kawaley J held that section 36(3)(g) was analogous to section 129 of the Companies Act ("references of questions to the Court") but that section 129 did "not apply to section 36(1) winding-ups"3.

The Court agreed with the broad jurisdiction envisaged by Kawaley J in Xio Diamond and held that...

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