Our latest Appleby report provides a 2016 snapshot of the petition filings and resultant court orders in respect of distressed companies in six offshore jurisdictions.
There were 225 petitions filed across four categories of company petitions measured in the report: compulsory windings up, conversion of voluntary liquidation to court supervised liquidation, schemes of arrangement and capital reduction.
Filings fell in the majority of the jurisdictions surveyed, and in total were down 10% on the previous year. The conversion rates of petitions into court orders also reduced, as more companies were able to successfully oppose petitions or reach consensual resolution.
"The general fall in petition filings in offshore jurisdictions recorded in 2016 to some degree reflects a movement toward restructuring over the course of the year" said Tony Heaver-Wren, a dispute resolution partner in Appleby's Cayman office.
EXECUTIVE SUMMARY
This Snapshot Report provides our annual review of the petition filings and resultant court orders in respect of distressed companies in six* offshore jurisdictions. Throughout each year, we closely monitor company notices and petition activity across our network of offices offshore in the following categories:
- Compulsory winding up, by shareholders or creditors;
- Conversion of voluntary liquidation to court supervised liquidation;
- Schemes of arrangement; and
- Capital reduction.
The key findings that emerge from our full-year, multi-jurisdictional review and analysis for 2016 are outlined below and explored further over the following pages.
Number of petition filings
- Total filings across the offshore jurisdictions fell, down 10% on the previous year.
- Petition numbers varied widely, from just 13 in the Isle of Man to 87 in Mauritius.
- Some of the lowest numbers of filings occurred in jurisdictions where alternative insolvency processes to petitions exist (BVI and Isle of Man).
- Mauritius again returned a disproportionately high number of filings, fuelled by a significantly larger population and domestic economy.
- The BVI and Isle of Man saw modest increases in the number of petitions filed in 2016.
Court Orders
- The Cayman Islands recorded the highest 'conversion rate' - two thirds of petitions filed in Cayman resulted in conversion to final orders, essentially as sought.
- The conversion rate was lowest in Mauritius, where only 13% of petitions resulted in final orders, although the significant lag between orders being made and reported in that jurisdiction contributed to that low percentage.
- The average time between the date an insolvency petition was submitted and the date a court order was made in the offshore jurisdictions in 2016 was seven weeks, a week longer than the previous year.
Our analysis in this report sets out to add further context to these statistics. Petition filings and conversion rates in each of the jurisdictions analysed are also explored in more detail, and the trends are placed in a global context.
We trust that you find our analysis over the following pages useful but please don't hesitate to get in touch with your usual Appleby contact should you wish to discuss anything in more detail.
Tony Heaver-Wren
Partner | Dispute Resolution | Cayman
* Jersey's corporate insolvency regime is not Petition-based but a summary of its insolvency and restructuring options is included on page 11.
To read this Report in full, please click here.
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.