As part of the on-going restructuring of the LATAM Airlines group, the Grand Court of the Cayman Islands (the "Court") recently approved an application made by the joint provisional liquidators of various of its group companies1 for the entry into a direct court-to-court protocol with the courts in New York2, Chile and Colombia.
As this appears to be the first occasion where the Court has approved a protocol of this nature and the jurisdictional basis for doing so was unclear prior to this matter, Kawaley J took the opportunity to helpfully clarify the basis upon which the Court's jurisdiction could be unlocked:
- Pursuant to the common law duty to assist foreign insolvency courts as underpinned by the principle of comity (the principal basis).
- Pursuant to subsidiary sources of jurisdictional
- the Court's inherent jurisdiction to manage its own processes; and
- Practice Direction No. 1 of 20184 which confirmed the appropriateness of the American Law Institute / International Insolvency Institute Guidelines and the Judicial Insolvency Network Guidelines for use in cross-border insolvency and restructuring matters.
The detailed decision of Kawaley J in this matter re-affirms the Court's willingness and flexibility to facilitate cross-border restructurings, maintaining the Cayman Islands' reputation as a sophisticated insolvency and restructuring jurisdiction. This decision also serves as useful reminder of the Court's practice regarding its cooperation with foreign courts.
Walkers acts as Cayman Islands counsel to the LATAM Airlines group and the joint provisional liquidators.
1 Kris Beighton and Jeffrey Stower of KPMG were appointed as joint provisional liquidators of LATAM Finance Limited and Peuco Finance Limited on 28 May 2020 and Piquero Leasing Limited on 10 July 2020 on the voluntary applications made by the LATAM Airlines group
2 The LATAM Airlines group is the subject of a voluntary Chapter 11 proceeding in the United states Bankruptcy Court for the Southern District of New York
3 Kawaley J noted that these are built on top of the foundations of comity and the common law duty to assist foreign insolvency courts
4 "Court-to-court communication and cooperation in cross-border insolvency and restructuring cases"
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.