Restructuring Review 2021

• Published date: 06 January 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Services, Financial Restructuring, Corporate and Company Law, Directors and Officers, Insolvency/Bankruptcy, Shareholders
• Law Firm: Campbells
• Author: Mr Guy Manning and Paul Kennedy

In summary

The first part of this chapter looks at the key aspects of the successful Cayman Islands restructuring regime. The second part reflects on the validation of transactions after a winding-up petition has been presented and the Cayman Islands Court of Appeal's recent guidance in that area.

Discussion points

• Schemes of arrangement
• Provisional liquidations
• Statutory moratoriums
• Creditors' meetings
• Centre of main interests shifting
• The rule in Gibbs
• 'Friendly' creditors' petitions
• Validation of post-petition transactions

Referenced in this article

• Ocean Rig [ref]
• Anthony Gibbs & Sons v La Societe Industrielle et Commerciale des Metaux (1890) 25 QBD 399
• LDK Solar [ref]
• 104(3)(b) of the Companies Law
• CW Group Holdings (unreported, 3 August 2018, Parker J)
• Re Emmadart Ltd [1979] 1 Ch. 540
• Re China Shanshui Cement Group Limited [2015 (2) CILR 255]
• Re CHC Group Ltd (unreported, 24 January 2017 McMillan J),
• Tianrui (International) Holding Company Limited v China Shanshui Cement Group Limited [ref]
• Burton v Deakin Ltd [1977] 1 WLR 309

Introduction

The Cayman Islands continues to be at the forefront of developments in restructuring and insolvency law offshore and among common law jurisdictions. As the world continues to grapple with the human cost and economic effects of COVID-19, many companies have chosen the Cayman Islands as an effective and efficient jurisdiction to restructure their debt and many investors have sought remedies from the Cayman courts in relation to insolvent or even fraudulent businesses. Campbells have been instructed in the most significant recent restructuring and liquidation matters to come before the Cayman Islands courts including Luckin Coffee, Abraaj, Green Dragon and the Biscayne Group.

This chapter is in two parts. In the first part we consider the Cayman restructuring regime and why it has been so successful in recent years. In the second part we review a recent Cayman Islands Court of Appeal decision that examines one of the key parts of the Cayman insolvency regime: the effective prohibition on post-petition transfers of assets or shares.

Restructuring in the Cayman Islands

Why the Cayman Islands?

The Cayman Islands has proved to be an attractive restructuring jurisdiction, not least because the Cayman courts have considerable experience with efficient management of large debt restructurings. Common law principles apply, which will be familiar to practitioners in jurisdictions such as England, Hong Kong and Singapore. Debt restructurings in the Cayman Islands often involve cross-border issues and there is a wealth of precedent for successful applications for recognition under Chapter 15.

Debt can be restructured in the Cayman Islands in relation to Cayman companies, as well as foreign companies that are redomiciled to, or...