Cayman Islands: Tales From The Oriente: The First Appointment Of Restructuring Officers In The Cayman Islands

Walkers acted as Cayman Islands counsel to Oriente Group Limited (the "Company") in respect of its successful petition for the appointment of Mr Kenneth Fung of FTI Consulting (Hong Kong) Limited, Mr Andrew Morrison and Mr David Griffin of FTI Consulting (Cayman) Ltd as joint restructuring officers (the "Joint Restructuring Officers") pursuant to Section 91B of the Cayman Islands Companies Act (as amended), being the first petition under the new restructuring officer regime, which came into force on 31 August 2022.

Background

The Company is the parent company of a group (the "Group") which operates a leading financial technology platform providing alternative sources of credit to traditional retail banks for the unbanked and underbanked population of Southeast Asia, with more than 8 million registered users. The Group's performance was significantly affected by the impact of the COVID-19 pandemic on the Southeast Asian economy and the platforms' users, which resulted in a substantial increase in non-performing (consumer) loans, as well as other factors impacting the global capital markets and investor community including, but not limited to, US-China tensions, the Russia-Ukraine war and interest rate increases by central banks.

Notwithstanding the Company engaging in discussions with its creditors regarding a proposed restructuring of its financial liabilities (as well as more broadly, the restructuring of certain Group liabilities due to third party lenders) from at least May 2022, on 20 September 2022, upon the expiry of the deadline for payment under two statutory demands dated 29 August 2022, two creditors (the "Objecting Creditors") presented a petition to the Grand Court of the Cayman Islands (the "Grand Court") (which was served on the Company on 27 September 2022) seeking, amongst other things, the winding up of the Company on the grounds that the Company is unable to pay its debts as defined in Section 93(a) of the Companies Act and is therefore insolvent (the "Winding Up Petition").

On 21 October 2022, the Company presented a petition to the Grand Court seeking the appointment of the Joint Restructuring Officers pursuant to Section 91B of the Companies Act on the grounds that the Company: (i) is unable to pay its debts as defined in Section 93(a) of the Companies Act and is therefore insolvent; and (ii) intends to present a compromise or arrangement to its creditors (or classes thereof) pursuant to Section 86 and/or 91I of the Companies Act, the law of a foreign country or by way of consensual restructuring (the "RO Petition").

Immediately before the hearing of the RO Petition, the Company was made aware that, notwithstanding the automatic stay on the commencement or continuation of proceedings upon the presentation of the RO Petition pursuant to Section 91G of the Companies Act (as discussed further below), on 10 November 2022, the Objecting Creditors presented a petition to the High Court of the Hong Kong Special Administrative Region (the "Hong Kong Court") seeking, amongst other things, the winding up of the Company (on substantially similar grounds advanced in the Winding Up Petition) (the "Hong Kong Winding Up Petition").