Cayman Islands Restructuring – Current State Of Play

Until the Cayman Islands introduces any changes to its corporate insolvency regime, with the COVID pandemic pushing many groups into the zone of insolvency, the following considerations remain relevant to structures involving a Cayman Islands entity:

• In recent years the Cayman Islands courts have become increasingly sympathetic to the needs of debtor companies looking to implement a viable restructuring plan
• Secured creditors can enforce their security in accordance with contractual terms independently of any formal insolvency proceeding and unaffected by the automatic stay arising from such proceedings
• Solvency in the Cayman Islands is determined by reference to a cash-flow test but balance sheet solvency will nonetheless be relevant to the exercise of directors' duties and the viability of a restructuring proposal