Shining A Light On Validation Orders In Cayman Insolvency Proceedings

Synopsis

A recent judgment of the Cayman Islands Court of Appeal has provided certainty for directors, general partners and insolvency practitioners with respect to the principles that the Cayman Islands Courts will take into account in determining whether to grant a validation order in the context of Cayman Islands winding up proceedings. This article provides an overview of validation orders in Cayman Islands insolvency proceedings and a summary of the relevant factors to consider when making an application seeking a validation order.

Introduction

Under Cayman Islands law, if a winding up order is made, the winding up of a company is deemed to commence at the time of the presentation of the winding up petition for an official liquidation or the passing of the members' resolution in the event that a Court supervised liquidation commenced as a voluntary liquidation. 1 There will inevitably be a period of time that passes between the commencement of the winding