Jurisdictional Risks for Secured Lenders: a Cayman Islands Solution

Lenders and other providers of finance to groups located in some overseas jurisdictions often encounter difficulties in taking and enforcing security over assets located in those jurisdictions. These difficulties typically relate to:

• perfecting security;
• the operation of insolvency stays under local law;
• the requirement for a court proceeding to enforce security or a public auction in connection with the sale of assets;
• local rules relating to the timing of the sale of assets, the identity of the purchaser (in particular their affiliation with the secured lender) and the price which must be achieved on the sale; and
• a hostile local insolvency regime, for example, in relation to preferences, voidable transfers and disclaimer.