In appointing restructuring provisional liquidators ("RPLs") to the
(a) that as a general rule, the place of incorporation of a company will be the most appropriate forum for insolvency / restructuring proceedings; and
(b) its company rescue first policy.
Officeholder Independence
A feature of some applications to appoint provisional liquidators / official liquidators is disagreement surrounding the identity of the proposed officeholders. A common argument being that where the nominated officeholders (or their firm) have previously provided financial advice to the company (or worked with the company), individuals from that firm are not properly independent and so should not be appointed. The perceived lack of independence argument. The Court has held, in a number of prior cases, that there must be the appearance of complete impartiality - see for example,
While not pushing back on the above case law, the Court in In the matter of
Further and importantly, the Court endorsed the comments of Parker J in
Forum for Restructuring / Insolvency Proceedings and Rescue First
The Court ordered the appointment of RPLs notwithstanding that a winding up petition had earlier been presented to the Hong Kong Court. There was a conflict between the applications before the two courts. The application before the Court being one to appoint RPLs to implement a scheme of arrangement (the scheme would, utilising the investment from the white knight, provide a cash distribution to creditors and compromise those debts; putting the company back on a more even financial keel). The application before the
It was held that the Court should assess which jurisdiction is the more appropriate to assume the role of primary insolvency proceedings. As a general rule this will be assumed to be the place of incorporation of the company, being the place that its investors, service providers and trade creditors would typically associate with, among other things, the company's registered office and the law governing the duties of its board of directors and its Articles. Therefore, in respect of a
Where there are competing applications, of the above nature, between the Court and a foreign court it was held that "it is not the practice of this Court to defer automatically to winding up proceedings begun in a foreign jurisdiction simply because a petition was presented there first in time. Instead this Court will consider, on the case by case basis, whether it is satisfied that there is a genuine intention on the part of the company to present a plan of reorganisation in the
The Court again emphasised the rescue first policy of the Court holding that the proposed restructuring should be given a chance over those creditors wishes who sought instead to wind SC up. Sun Cheong therefore sits in a line of recent case law where a restructuring has been given a chance to breathe over some (albeit normally minority) creditor wishes to liquidate. See for example ACL Asean, Grand TG Gold and CW Group.
Footnote
1 https://maples.com/Knowledge-Centre/Industry-Updates/2018/08/Officeholder-Independence-in-Cayman-Islands-Debt-Restructurings
Originally Published by
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.
Mr Aristos Galatopoulos
PO Box 309, Ugland House
KY1-1104
Tel: 9498066
Fax: 9498080
E-mail: Ailbhe.Enright@maples.com
URL: www.maples.com
© Mondaq Ltd, 2020 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source