Cayman Islands: Winding Up A Cayman ELP – Post Judgment Admission Of Evidence And Costs

A recent decision of the Grand Court of the Cayman Islands1 considered the principles upon which a Cayman Islands exempted limited partnership ("ELP") may be wound up by the Court under its 'just and equitable' jurisdiction2, the Court's power under section 95(3) of the Companies Law to grant alternative remedies when hearing a winding up petition and to admit evidence after the release of a judgment but before the order is sealed.  

The Background 

Cybernaut Growth Fund, L.P. (the "Partnership") was an ELP invested in various operating companies in the People's Republic of China.  Five of the six limited partners, together holding just under 50% of the limited partnership interests (the "Petitioners") presented a winding up petition against the Partnership pursuant to section 15(4) of the Exempted Limited Partnership Law (2012 Revision) (the "Law"), based on a justifiable loss of trust and confidence in the general partner's management of the Partnership.  The general partner (the "GP") had become dysfunctional due to, amongst other reasons, a dispute between its principals involving allegations of misconduct and the GP's failure to provide audited financial statements and other financial reports as required by the limited partnership agreement (the "LPA") and the Law. 

Although it was common ground between parties that the Partnership should be brought to an end, the petition was opposed by the GP and the other limited partner, which held just over 50% of the limited partnership interests ("Oriental") (together, the "Respondents").  The Respondents argued that the Partnership should be wound up in accordance with the voluntary liquidation provisions in the LPA and that the GP should act as voluntary liquidator. 

Winding Up on Just and Equitable Grounds

It was not disputed that the Partnership could be wound up if there had been a justifiable loss of trust and confidence in the GP's management of the Partnership.  The onus was on the Petitioners to establish the managerial misconduct by the GP alleged in the petition, such that the intervention of the Court was warranted.  The Court found that, based on the evidence, the Petitioners were justified in bringing the petition.  The Court placed particular reliance upon the GP's failure to provide proper financial transparency and the breakdown in the relationship between the principals of the GP.  

The Respondents argued that, despite the Court's finding that there had been a justifiable loss of trust and confidence, the Court should exercise its residual discretion not to make a winding up order for the following reasons. 

First, that the Petitioners were not seeking the benefit of a class remedy but were instead seeking a winding up order for an improper reason: to receive the benefit of a preference over Oriental because the LPA gave the Petitioners priority in the distribution of realisations of Partnership assets over Oriental.  The Respondents argued that the Petitioners were seeking a winding up order not as a class remedy but to take advantage of this preference and therefore the winding up was not demonstrably for the benefit of the limited partners as a whole.  The Court held that this argument did not justify refusing a winding up order as the mere fact that the financial circumstances of the Partnership were such that one limited partner may face a greater risk of losing its investment did not provide a basis for denying the Petitioners a winding up order.  In any event, the GP's evidence was that the value of the Partnership's assets would be sufficient for Oriental to have an equal financial interest in the winding up of the Partnership with the Petitioners. 

Secondly, that the Court should not interfere with the contractually agreed dissolution process set out in the LPA which provided that upon the termination of the Partnership the GP was to act as voluntary liquidator and the GP could only be replaced in the case of gross negligence, reckless disregard, wilful misconduct or bad faith.  The Respondents argued that the Petitioners' case did not establish any of those matters and therefore nobody other than the GP was entitled to act as liquidator of the Partnership.  Again the Court was not persuaded by this argument and concluded that the events which had occurred prior to the filing of the petition led to the conclusion that the GP was dysfunctional and that it had demonstrated that it was incapable of taking even basic steps which were necessary to dissolve the Partnership. 

Thirdly, that the Petitioners had alternative remedies.3  The Respondents argued there were three alternative remedies open to the Petitioners: (1) an offer would be made by the Respondents' to purchase the Petitioners' partnership interest (although as it turned out no such offer was actually made prior to the conclusion of the trial); (2) the enforcement of the Petitioners' statutory and contractual rights of access to the Partnership's books and records; and (3) a voluntary liquidation pursuant to the LPA with the GP acting as liquidator.  Jones J did not find these alternative remedies viable and in the circumstances considered that they did not justify the Court exercising its discretion to refuse to make a winding up order. 

The Court therefore ordered that the Partnership be wound up. 

Post Judgment Applications

The Court provided the parties' attorneys with a draft of its written judgment on 29 August 2013, in accordance with its usual practice.  At the hearing to hand down the judgment, the GP made an application for: (a) leave to adduce evidence of discussions relating to a potential buy-out of the Petitioners' limited partnership interests by the Respondents; and (b) an order pursuant to section 95(3)(d) of the Companies Law (2012 Revision) (as an alternative to a winding up order) for the purchase by the GP and/or Oriental of the Petitioners' partnership interests. 

It was not disputed that a trial judge has a discretion to receive new evidence after a judgment has been given, but before the Court's order has been sealed.  Jones J adopted the position set out in the English decision Charlesworth v Relay Roads Ltd4 as representing Cayman Islands law.  The Charlesworth case held that a trial judge is entitled to take a more flexible approach in the admission of new evidence than the Court of Appeal, as set down in Ladd v Marshall5. 

Jones J refused to admit the new evidence and found that " is obviously not new evidence at all.  It is evidence which the Respondents decided to withhold from use at trial.  It is only new evidence to the extent that it described the sequence of events taking place since trial, culminating in the buy-out offer made on 8 September."  The buy-out offer made on 8 September following the trial which was referred to in the evidence the respondents were seeking to admit had been made when the Respondents knew that the Court had decided that the Petitioners were entitled to a winding up order.  In these circumstances the Court would not be persuaded by the evidence that the Petitioners' decision to reject the offer was unreasonable, such that it would dismiss the petition or make an order under section 95(3)(d).  The Respondents had a reasonable opportunity at the trial to argue in favour of a buy-out order as an alternative remedy but chose not press the argument, or to provide evidence of the prospects of a buy-out offer being made.  The Court was not prepared to permit the Respondents to re-open their case in relation to a buy-out of the Petitioners' limited partnership interests and dismissed the Respondents' application. 

As is usual in these circumstances, the Court ordered that the Respondents pay the Petitioners' costs of the proceedings.  However, the Petitioners also applied for an order that the GP not be permitted to call upon the indemnity in the LPA for defending the winding up petition.  Jones J noted that when considering a costs order for a contributory's petition (in the case of a company) or a limited partner's petition (in the case of an ELP), the appropriate costs order will depend upon whether the Court has directed at the interlocutory stage of the proceedings that the proceedings be treated as an inter partes proceeding between the shareholders/partners or proceedings against the company/ELP which is the subject of the petition.  In these circumstances, by a prior order of the Court, the proceedings were to be treated as inter partes proceedings and the GP was made a Respondent to the proceedings in its own right.  Jones J found that where such an order has been made "...the general rule is that none of the costs be paid out of the assets of the [partnership] and the unsuccessful parties should pay the costs of the successful parties..."  However, the Court made no final determination on this point as the GP had not yet made any claim on the indemnity. 


The Grand Court's decision offers helpful guidance concerning the Court's approach to the exercise of its just and equitable jurisdiction to wind up ELPs and as to the standard of conduct expected of general partners of Cayman Islands ELPs in fulfilling their duties under the relevant LPA and the Law.  This case has re-affirmed that the well-established legal principles applicable to the winding up of companies will apply to ELPs, while also clarifying the Court's position in relation to the admission of further evidence following delivery of a draft judgment to parties' attorneys and the appropriate costs orders in winding up proceedings.


In re Cybernaut Growth Fund, L.P. (Unreported, Jones J, Grand Court, 12 September 2013).  Maples and Calder acted for the petitioning limited partners.

2 Section 92(e) of the Companies Law (2013 Revision) as applied to ELPs by section 15(4) of the Exempted Limited Partnership Law (2013 Revision).

3 A winding up petition on just and equitable grounds will be dismissed, in the exercise of the Court's discretion, if there is an alternative remedy available to the petitioner and that he is acting unreasonably in not pursuing it.  See the Court of Appeal decision in Camulos Partners Offshore Limited v Katherin & Co 2010 (1) CIHL 303.

4 [2000] 1 WLR 230

5 [1954] 1 WLR 1489

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.

Events from this Firm
28 Apr 2016, Webinar, George Town, Cayman Islands

A topical discussion on recent updates covering some of the more frequently asked questions around FATCA and CRS.

29 Jun 2016, Webinar, George Town, Cayman Islands

This webcast focuses on the impact FATCA and CRS are having on structured finance vehicles set up in the BVI, Cayman Islands and Ireland and covers in detail the impending reporting and notification deadlines in each of these jurisdictions.

11 Aug 2016, Webinar, George Town, Cayman Islands

Our panel of experts will reflect on the impact of LLCs in the month since the first available registration date and discuss why the LLC was introduced and how it can be used to help our clients.

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”

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.