Cayman Islands: A Comparison Of Mr Picard's Experiences In Cayman and the BVI

Last Updated: 27 August 2013
Article by Eliot Simpson

The decision earlier this year of Mr Justice Jones in the Financial Services Division of the Cayman Islands gave a broad interpretation of the assistance that may be available to a foreign insolvency representative at common law. This stands in rather stark contrast to the approach taken in the Commercial Court in the British Virgin Islands, where the common law basis for recognition was found to have little place in BVI law and where statutory assistance is available only to representatives from a limited number of jurisdictions.

In Irving H Picard and Bernard L Madoff Investment Securities LLC v Primeo Fund (14 January 2013, unreported) Mr Justice Jones ruled on a series of preliminary issues in an action brought by Mr Picard asserting a number of avoidance claims. Mr Picard is the trustee of Bernard L Madoff Investment Securities LLC (BLMIS). In a short judgment dated 5 February 2010 (2012 (1) CILR 231) Jones J had granted Mr Picard recognition under section 241(1) of the Companies Law (2009 Revision) as the sole person having the right to act on behalf of BLMIS in the Cayman Islands.

Thereafter, Mr Picard commenced the avoidance action (seeking to set aside payments made by BLMIS to Primeo Fund) claiming both under the Cayman Islands preference provision and under US insolvency law. The availability of these claims was considered (as preliminary issues) by Jones J in his 14 January 2013 judgment.

Ancillary Orders

Section 241 of the Law empowers the court to make orders ancillary to a foreign bankruptcy proceeding. These may be made for a number of purposes, including recognition, imposing a stay on proceedings or on the enforcement of judgments, allowing an examination or production of documents and ordering the turnover of any property belonging to a debtor. In his judgment Jones J stated that section 241 supplements and partially codifies the common law; it did not abolish the common law rules, which continue to exist alongside the new statutory provision.

Jones J decided that section 241 does not allow for assistance to be given by way of avoidance actions, even though the US courts had given such assistance under section 304 of the US Bankruptcy Code, on which section 241 was based. In particular, whilst section 304 allowed the US court to assist in the turnover of any property of "the estate", section 241 instead referred to property "belonging to a debtor", which Jones J held to mean the same as property of the company (and did not include the right to bring avoidance actions under the insolvency regime).

Avoidance Claims

Jones J went on to decide that if section 241 did allow the foreign trustee to bring avoidance claims (contrary to his decision on this point), the court could only apply Cayman Islands law to those claims. Claims under US law could not therefore be brought in any event. Jones J considered whether the assistance that could be provided at common law could extend to giving access to the Cayman avoidance provision and he concluded it did, albeit with some hesitation. There were three principal issues that caused his hesitation.

The first was the decision of the Supreme Court in Rubin v Eurofinance SA [2012] UKSC 46. Although Lord Collins in that judgment referred to cases of common law assistance, he did not consider whether avoidance powers could be made available to a foreign representative. Jones J decided that the scope of assistance available at common law includes the power to entertain a preference claim.

"On the face of it ... a foreign representative from a jurisdiction that is not a 'relevant' jurisdiction has no access to either recognition or assistance in BVI."

The second issue was whether this type of assistance depended on there being sufficient connection between the company and the jurisdiction; the sort of connection that would allow the company to apply to be wound up as a foreign company under Cayman law (found in section 91 of the Companies Law). Jones J decided that the scope of available assistance did not depend upon there being jurisdiction to make a winding up order.

The third issue was the principle that a court has no inherent jurisdiction to exercise a statutory power in circumstances not falling within the provisions of the statute in question. Jones J interpreted the principle to mean that the common law could not bring into play a statutory provision to achieve a purpose which is different from the object of the statute. He concluded that bringing the preference claim provisions of section 145 into play in respect of BLMIS did not depart from the statutory objective of the Companies Law.

In the British Virgin Islands the status of common law recognition and assistance was decided quite differently by Mr Justice Bannister QC (Ag) in Irving H Picard v Bernard L Madoff Investment Securities LLC (BVIHCV 0140 of 2010, judgment dated 12 November 2012), although he subsequently disapproved his judgment to a limited extent.

In the Picard v BLMIS case, Mr Picard sought recognition by the BVI court, together with a power to require any person to deliver up to him property of BLMIS. Bannister J refused to make the orders sought. Central to his reasoning was the codification of the concepts of recognition and assistance in the BVI Insolvency Act 2003, so that "the common law concept of recognition has no place under the British Virgin Islands legislation."

Unlike the Cayman Islands, BVI has enacted provisions based on the UNCITRAL Model Law on cross-border insolvency. Those provisions are found in Part XVIII of the Insolvency Act, not yet in force, and they would apply to proceedings in "designated" jurisdictions only.

Part XIX of the Insolvency Act allows the court to provide assistance to a foreign representative, but does not provide for recognition. It is in force but applies only to "relevant" jurisdictions (as identified by the Financial Services Commission). Nine jurisdictions have been so identified, including Hong Kong, the United Kingdom and the United States.

Section 466 of the Insolvency Act provides that once a jurisdiction is designated under Part XVIII it ceases to be a relevant jurisdiction under Part XIX. Bannister J therefore found that the two parts were mutually exclusive and that the legislature must have intended that a representative from a relevant jurisdiction must be confined to the relief under Part XIX and that the common law concept of recognition could not survive in tandem with the statutory regime.

Statutory Regime

In a recent decision, Bannister J has reconsidered that decision on an application by a Hong Kong bankruptcy trustees for recognition in BVI. He decided that the court can grant recognition at common law to proceedings in relevant jurisdictions. However, he did not accept that a foreign representative, even once recognized, could have access to the statutory powers available to a BVI appointee, such as the voidable transaction provisions.

On the face of it therefore, a foreign representative from a jurisdiction that is not a relevant jurisdiction has no access to either recognition or assistance in BVI. However, this is a developing area and one BVI law firm has reported that it successfully obtained recognition of an appointee from a non-relevant jurisdiction, although there has not (at the time of going to print) been a judgment handed down in that case.

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.

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 Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.