Companies incorporated in the Cayman Islands usually conduct
operations and hold assets elsewhere than in the Cayman Islands and
Cayman Islands corporate insolvencies therefore commonly have a
significant international dimension. Corporate insolvencies are
conducted under the supervision of the Financial Services Division
of the Grand Court of the Cayman Islands and the requirements of
Cayman law mean that the insolvency practitioners (the liquidators)
require court approval ('sanction' in the language of the
statute) before they can take certain significant steps in the
Those steps include: bringing and defending legal proceedings,
carrying on the corporate business, making compromises or
arrangements with creditors and compromising claims. Another
feature of Cayman corporate insolvencies is the liquidation
committee: a committee of creditors must be established in respect
of every insolvent company being wound up by the court. The
liquidators must report to the members of the committee and when
the liquidators require sanction the members of the committee are
entitled to be heard on the application for sanction. A recent
decision In the matter of PAC Ltd (in official liquidation) shows
that these features of liquidations in the Cayman Islands can be
used to provide an opportunity for creditors based overseas to play
an informed and potentially decisive role in important decisions in
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Article first published in International Corporate Rescue in May
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.
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