Changes to the Cayman restructuring regime – key points
The Cayman Islands' legislature has gazetted the Companies (Amendment) Bill 2021 ("Bill") which introduces a new corporate restructuring process and creates a role for a dedicated restructuring officer in the Cayman Islands.
This initiative is a significant departure from the current position where an application for the appointment of a 'light touch' provisional liquidator, for the purpose of restructuring, must be made as part of the winding up process. Under the changes, a restructuring officer can be appointed by a company acting by its directors without a resolution of its members or an express power in its articles of association. At any time after the presentation of a petition for the appointment of a restructuring officer:
- no proceedings shall be commenced or continued with against the company
- no resolution shall be passed for the company to be wound up; and
- no winding up petition may be presented against the company, except with leave of the Court.
These changes are a welcome development for the Cayman restructuring regime as they will free the company from the stigma and negative publicity associated with a winding up petition and permit more expedient access to a reorganisation of its affairs. Given the popularity of the Cayman Islands for foreign investment, this initiative will provide a more flexible and effective procedure for insolvency practitioners when dealing with distressed entities.
The Bill can be accessed here.
To discuss further how this may affect your business in the Cayman Islands, please contact one of our lawyers listed on this briefing.
