Cayman Islands Restructuring: Getting Oriented With The New Regime ' Part II

• Law Firm: Conyers
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Corporate and Company Law, Insolvency/Bankruptcy
• Author: Mr Alex Potts KC, Jonathon Milne, Erik Bodden and Jordan McErlean
• Published date: 19 January 2023

On 11 November 2022, Mr Justice Kawaley ordered the first appointment of restructuring officers in Re Oriente Group Limited (FSD 231 of 2022) under the new Cayman Islands restructuring regime, with reserved written reasons to follow. On 15 November 2022, we provided a brief update on some of the key takeaways from the hearing, which can be found here. On 8 December 2022, Mr Justice Kawaley handed down a written judgment and we explore the additional points of interest beyond our previous note below.

A selection of our previous articles on the Cayman Islands restructuring regime, which came into effect on 31 August 2022, are at the following links: here, here and here.

Background

On 27 September 2022, Liu Chak Kwan Kelvin and Tsangs Group Holdings Limited, two unsecured creditors (the "Petitioners"), filed a creditor's winding up petition in the Cayman Islands following the issuance and expiry of statutory demands in respect of debts of approximately US$275,000 and US$1,100,000.

Subsequently, on 21 October 2022, the respondent company, Oriente Group Limited (the "Company"), presented a restructuring petition seeking the appointment of restructuring officers in the Cayman Islands. On 11 November 2022, the Company's restructuring petition came on for a hearing.

The day before the hearing, the Petitioners also filed a winding up petition in Hong Kong in breach of the automatic stay imposed by section 91G of the Companies Act (2022 Revision) ("Companies Act") seeking, amongst other things, the winding up of the Company (on substantially similar grounds advanced in the Cayman Islands winding up petition).

Effect of the Automatic Moratorium

As explained in our previous article, a preliminary threshold matter was the statutory construction of section 91G of the Companies Act which provides for an automatic worldwide moratorium upon filing the petition for the appointment of restructuring officers, unless withdrawn or dismissed. This is to be compared with the remedy of presenting a winding up petition and applying for the appointment of provisional liquidators for restructuring purposes under the previous regime, which provided for a stay from the date a provisional liquidator was appointed and/or a winding up order was made under section 97(1) of the Companies Act.

In the Re Oriente judgment, Kawaley J commented that the statutory stay on proceedings under Section 91G of the Companies Act: "might be said to turbo charge the degree of protection filing a...