The Next Generation Of Corporate Rescue In The Cayman Islands: Lessons From Re Oriente Group Limited

• Law Firm: Collas Crill
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Corporate and Company Law, Directors and Officers, Insolvency/Bankruptcy, Contracts and Commercial Law
• Author: Mr Mark Burrows
• Published date: 16 March 2023

This article was originally published in ThoughtLeaders4 FIRE Magazine. Read the full issue here.

On 31 August 2022 the Cayman Islands entered a new generation of corporate restructuring when the Companies (Amendment) Act 2021 came into effect.

The Amendment Act is significant in that it introduced a new regime for the restructuring of financially distressed companies. Prior to the Amendment Act, corporate restructurings were typically effected by way of a provisional liquidation coupled with a creditors and/or members scheme of arrangement (commonly known as 'soft touch' or 'light touch' provisional liquidation). Corporate restructurings are now effected under a new section of the Companies Act headed "Company Restructuring" which establishes a dedicated restructuring regime similar to US Chapter 11 or UK administration.

This article takes stock of the first judgment under the dedicated restructuring regime in Re Oriente Group Limited (unreported, 8 December 2022 Kawaley J).

Re Oriente Group Limited

The case concerned the parent company (the Company) of a corporate group that operates a large Asia-based financial technology platform providing microfinance and alternative sources of credit. The group's finances were significantly impacted by the COVID-19 pandemic and other global factors that caused a substantial increase in non-performing loans and other operating pressures. This caused the Company and various group members to default on a number of secured and unsecured loans.

On 29 August 2022 two creditors (the Petitioning Creditors) issued statutory demands against the Company. When those demands were not satisfied, the Petitioning Creditors presented a petition for the Company's winding up in the Grand Court of the Cayman Islands in September 2022 (the Cayman Petition). In response to the winding up petition, the Company filed its own petition under the new regime on 21 October 2022 seeking the appointment of restructuring officers (the RO Petition).

The RO Petition was listed for hearing on 11 November 2022. A day before that, the Petitioning Creditors filed a separate, further petition for the Company's winding up in the High Court of Hong Kong (the Hong Kong Petition).

At the hearing of the RO Petition, the Petitioning Creditors sought to challenge the RO Petition on the grounds that:

a) a petition for the appointment of restructuring officers could not be presented if a winding up petition was already afoot; and

b) that the global moratorium on...