The Path To Redemption Is Not Always Smooth

'The Path to Redemption Is Not Always Smooth': Unfortunate Consequences for Unredeemed Investors in the Cayman Islands.

A recent judgment of the Judicial Committee of the Privy Council ('Privy Council' or 'Board'), the ultimate appellate court of the Cayman Islands, has provided certainty for investors and insolvency practitioners alike with respect to the enforceability and priority to be afforded to investors' claims for unpaid redemption proceeds in the winding up of Cayman Islands investment funds. The judgment has, however, given rise to rise to commercially unfortunate results in that the effects of a mis-stated NAV now appear capable of being perpetuated in a winding up, regardless of the fund's ability (or inability as the case may be) to lawfully make payment of redemption proceeds prior to the commencement of liquidation.