Cayman Islands: Cayman Islands Restructuring – Recent Cases

Last Updated: 4 July 2019
Article by Nigel K. Meeson Q.C.

Restructuring of insolvent companies in the Cayman Islands is implemented by a flexible regime comprising the appointment of provisional liquidators coupled with an adjournment of the winding-up petition. This enables a restructuring to be pursued, typically through a scheme of arrangement and the dismissal of the winding-up petition. However, recent cases show that the Court will not do so without a sound basis.

The Court has gone so far as to adjourn a winding up petition to enable a restructuring to be pursued even without the protection of provisional liquidators. Segal J was prepared to do so in Grand TG Gold Holdings Limited (unreported, 22 August 2016), but this is exceptional. More recent cases have taken a more conventional approach.

In CW Group Holdings Limited (unreported, 3 August 2018) Parker J was faced with two competing applications to appoint provisional liquidators: one filed by the company for the purposes of pursuing a restructuring and another filed by a significant bank creditor, supported by other bank creditors, for the purposes of protecting the assets of the company against alleged mismanagement. He resolved the matter by considering whether it was "necessary" to appoint provisional liquidators for the purposes of preventing the dissipation or misuse of assets and mismanagement or misconduct by the directors which was the statutory test which the creditor had to satisfy in order for the Court to make an appointment under Section 104(2)(b) of the Companies Law. He held on the evidence that the creditor had not satisfied this heavy burden which required clear or strong evidence to be presented to the Court.

The judge also rejected the suggestion that the company's proposed provisional liquidators were not independent because they had been appointed by the directors. Affiliates of the proposed provisional liquidators were already in possession of knowledge and information having been working with the company in Hong Kong and Singapore. They were therefore suitable in terms of efficiency and economy. He rejected the suggestion that a nominee from the creditor's proposed provisional liquidators be appointed alongside the company's nominees as being unnecessary. As he pointed out, "if and when appointed, as officeholders, provisional liquidators are independent persons operating under the direction of the court" and "once appointed the joint provisional liquidators would act as officers of the court and in the best interests of all the company's creditors and stakeholders, irrespective of who sought the appointment."

Most recently in ACL Asean Tower Holdco Limited (unreported, 8 March 2019) Kawaley J adjourned a winding-up petition and appointed joint provisional liquidators ("JPLs") even though he had found that a case for winding-up had been made out. The JPLs were directed to prepare a report to the court on whether a restructuring should be further considered or whether it is appropriate to make a winding-up order. This was an unusual order to make and appears to have been based upon the judge having wrong-footed the company by initially indicating that he intended to dismiss the petition and then changing his mind during the course of the hearing.

When the adjourned petition came on for hearing two months later, the JPLs had reported in unequivocal terms that they did not consider a financial restructuring to be viable and recommended the company be placed into official liquidation at the earliest opportunity. Notwithstanding that clear recommendation, notices of appearance were entered by the majority shareholder and certain directors, as creditors, opposing the petition. Unsurprisingly, the judge followed the recommendation of the JPLs and rejected the submissions of those opposing the petition. As he pointed out it is unprecedented for a common law court to adjourn a winding-up petition to permit the company's management to explore the hypothetical possibility of an as yet entirely abstract restructuring in circumstances where the JPLs have reported that the company should be wound up immediately. Although the outcome appeared to be a foregone conclusion, the judge nevertheless took the opportunity to review the authorities and to restate the applicable principles.

Kawaley J identified three distinct principles:

  1. as against an insolvent company, a creditor is entitled as of right to a winding-up order;
  2. the Court has a broad discretion to adjourn the hearing of a petition;
  3. where there is a difference of views between various unsecured creditors as to whether the company should be wound up, where appropriate the Court will have regard to the wishes of the majority of such creditors.

The judge observed that where an insolvent company takes the initiative and seeks to implement a court-supervised restructuring, the Court will accord the company's management with a generous margin of appreciation when faced with attempts by creditors to impose a "full-blown" provisional or official liquidation instead. The cases also established that the Cayman Court adopts a more flexible modern approach to adjourning winding-up petitions to explore restructurings, but that there must be tangible grounds for such an adjournment. Such tangible grounds are likely to consist of either (a) support from the majority of creditors and a Listing Committee, (b) proactive restructuring steps taken by the company's management and/or (c) support from the majority of creditors as well as the joint provisional liquidators. Even a short adjournment requires a rational basis to be advanced in order to be justified.

Finally it is of course the case that a winding-up order does not prevent a restructuring taking place within the context of an official liquidation, but if a winding up order is to be avoided the company has to come to the court with a cogent justification for the court to exercise its power of adjournment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions