Restoration To The Register Of Companies And Winding Up Order

• Published date: 25 April 2022
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Services, Corporate and Company Law, Insolvency/Bankruptcy
• Law Firm: Conyers
• Author: Ms Róisín Liddy-Murphy and Sean-Anna Thompson

Introduction

In the recent judgment of In the Matter of Margara Shipping Limited (the "Margara Decision")¹ the Cayman Islands Grand Court provided some useful guidance on the basis on which a company can be restored to the Register of Companies (the "Register") and subsequently wound up pursuant to section 159 of the Companies Act (2021 Revision) (the "Companies Act") and the Grand Court Rules (2022 Consolidation) ("GCR"), Order 102, Rule 18.

The Legal Basis to Restore and Wind Up A Company

Section 159 of the Companies Act provides that:

"If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register in accordance with this Act, the Court on the application of such company, member or creditor made within two years or such longer period not exceeding ten years as the Cabinet may allow of the date on which the company was so struck off, may, if satisfied that the company was, at the time of the striking off thereof, carrying on business or in operation, or otherwise, that it is just that the company be restored to the register, order the name of the company to be restored to the register, on payment by the company of a reinstatement fee equivalent to the original incorporation or registration fee and on such terms and conditions as to the Court may seem just..."

Order 102, Rule 18(1) of the GCR provides that:

"An application by a creditor under Section 159 may be combined with an application under Section 94 of the Companies Act and may be made by petition in Form No. 68 of the Grand Court Rules - Volume II, in which case Order 3 of the Companies Winding Up Rules (as amended and revised) shall apply".

The Margara Decision

The Margara Decision was the second reported Cayman Islands case that deals with the law surrounding the right of a company to be restored and thereafter wound up in the Cayman Islands. The case involved a company that was struck off the Register of Companies on 30 December 2011. Margara Shipping Limited (the "Company") was incorporated solely for the purposes of ownership of a vessel, "the Margara". Shipowners Insurance and Guaranty Company Ltd., a company registered in Bermuda was a creditor (and a prospective creditor) of the company (the "Petitioner"). The Petitioner applied for the restoration and subsequent winding up of the Company pursuant to Section 159 of the Companies Act and Order 102, Rule 18 of the GCR.

The Petitioner had provided the Company with a Certificate of...