Costs Orders: Insolvency v Litigation Proceedings

In the recent judgment In the matter of Abraaj Holdings (FSD 95 of 2018, Unreported 4 January 2019), the Grand Court of the Cayman Islands clarified that petitioning creditors in insolvency proceedings who have not acted unreasonably should not be subject to an adverse costs order. This contrasts with the position in adversarial litigation proceedings, where typically the unsuccessful applicant in the proceedings will be ordered to bear costs.

This matter concerned the hearing of an application brought by the Joint Provisional Liquidators ("JPLs") for a further adjournment of a winding up petition ("Petition") brought against Abraaj Holdings (the "Company"). This was supported by two individuals, one of whom was a creditor of the Company and member of the Liquidation Committee, and the other was a director of, shareholder and founder of the Company. The adjournment was opposed by the Public Institution for Social Security of Kuwait ("PIFSS"). The Court decided to