Reforms To Cayman Islands Restructuring Laws - The New Restructuring Officer Regime

• Published date: 01 August 2022
• Subject Matter: Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Insolvency/Bankruptcy
• Law Firm: Maples Group
• Author: Mr Aristos Galatopoulos, James Eldridge, Caroline Moran and Nick Herrod

The long awaited reforms to Cayman Islands restructuring laws will come into force on 31 August 2022. The formal gazetting of these laws today (29 July 2022) has helpfully provided a hard-and-fast commencement date.

Debtors will now be able to file in the Cayman Islands court for the appointment of restructuring officers and obtain an immediate stay on unsecured creditor action, without the need to file a winding up petition.

These new proceedings, while retaining all that is positive with the prior law, will significantly enhance the Cayman Islands restructuring regime by:

• Removing the need to file a winding up petition in order to obtain a stay on creditor action.
• Providing for the stay (although not the appointment of restructuring officers) to arise automatically on filing the Court papers without the need for any Court hearing (in the prior law the moratorium only applied on the appointment of the provisional liquidators).
• Providing that, as a matter of Cayman Islands law, the stay will have extraterritorial effect.
• Including provisions which provide the potential for Cayman Islands schemes of arrangement to compromise debt governed by English law (an important consideration in light of challenges arising from Brexit) thereby broadening the circumstances in which Cayman Islands restructuring proceedings may provide the best fit.

While the reforms are good news for debtors, the restructuring officer...