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Reforms To Cayman Islands Restructuring Laws – The New Restructuring Officer Regime – Insolvency/Bankruptcy



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The long awaited reforms to Cayman Islands restructuring laws
will come into force on 31 August 2022. The formal gazetting of
these laws today (29 July 2022) has helpfully provided a
hard-and-fast commencement date.

Debtors will now be able to file in the Cayman Islands court for
the appointment of restructuring officers and obtain an immediate
stay on unsecured creditor action, without the need to file a
winding up petition.

These new proceedings, while retaining all that is positive with
the prior law, will significantly enhance the Cayman Islands
restructuring regime by:

  • Removing the need to file a winding up petition in order to
    obtain a stay on creditor action.

  • Providing for the stay (although not the appointment of
    restructuring officers) to arise automatically on filing the Court
    papers without the need for any Court hearing (in the prior law the
    moratorium only applied on the appointment of the provisional
    liquidators).

  • Providing that, as a matter of Cayman Islands law, the stay
    will have extraterritorial effect.

  • Including provisions which provide the potential for Cayman
    Islands schemes of arrangement to compromise debt governed by
    English law (an important consideration in light of challenges
    arising from Brexit) thereby broadening the circumstances in which
    Cayman Islands restructuring proceedings may provide the best
    fit.

While the reforms are good news for debtors, the restructuring
officer regime retains important creditor protections under Cayman
Islands law. The law contains various checks and balances to ensure
the interests of creditors are appropriately safeguarded. There
will remain no stay in any Cayman Islands insolvency or
restructuring proceeding on the enforcement of security by secured
creditors. Further, specific legislative provisions have been
included to ensure that the Cayman Islands remains a preeminent
jurisdiction for bankruptcy remote finance vehicles.

Dispute Resolution & Insolvency Partners Caroline Moran and
Nick Herrod from Maples and Calder, the Maples Group’s law
firm, led the legislative reform project and worked closely with
the industry, the judiciary and the Cayman Islands Government in
delivering the enhanced regime.

Our full industry update including other important features of
the upcoming law reforms is available here1.

Footnote

1. https://maples.com/en/knowledge-centre/2021/10/good-news-for-debtors-seeking-access-to-the-cayman-restructuring-regime

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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