Covid-19 In The Courts

On 26 June 2020, the Cayman courts made a winding up order for an insolvent company notwithstanding arguments from the company that the COVID-19 pandemic constituted "exceptional circumstances" which justified the refusal of the order. As governments and insolvency courts around the world wrestle with the proper approach to take with the unique challenges presented in the current situation, the Cayman courts have shown that the current situation will not necessarily be a free pass for insolvent companies.

In common with many jurisdictions which have their origins in English law, Cayman has a statutory demand process by which a debt which has been formally demanded and which remains unpaid after a specified period leads to a non-paying company being deemed to be insolvent. If such a debt is undisputed, a petitioning creditor has a prima facie entitlement to an order winding up the company. However, the making of a winding up order is discretionary and a court may