Re HQP Corporation Limited (In Official Liquidation) ' A Lifeline For Unredeemed Investors In Cases Of Substantial Corporate Fraud

• Published date: 19 July 2023
• Subject Matter: Corporate/Commercial Law, Wealth Management, Criminal Law, Offshore Financial Centres, White Collar Crime, Anti-Corruption & Fraud, Shareholders
• Law Firm: Appleby
• Author: Mr Andrew Jackson and Ross McLeod
• topic: Bankruptcy and Insolvency,Contracts,Corporate / Commercial,Civil Procedure,Securities Law

Given the Cayman Islands' status as a leading offshore financial centre and home to a very significant number of corporate investment vehicles, as with all other financial centres (both on and offshore), it is perhaps inevitable that there will be some cases, from time to time, where investors in a Cayman company have been the victims of a fraud. And in some of those cases, the picture painted on the basis of the (then undiscovered) fraud is likely to have been what persuaded investors to subscribe.

In such a case, once the fraud has been discovered, it is unlikely to be very long before the company is put into liquidation. But the issue for shareholders who were led to invest in the company on that basis has been whether, once it is put into liquidation, they continue to have a viable claim against it for misrepresentation.

That issue had remained undecided in the Cayman Islands until the recent...