Cayman Corporate Funds: Changes Relating To Winding Up And Insolvency

Introduction

Part V of the Cayman Islands Companies Law, dealing with the winding up of Cayman companies, has been replaced with effect from 1 March 2009. The new provisions preserve established principles of Cayman insolvency law, clarify some areas of uncertainty and enhance provisions which encourage good corporate governance. This Advisory focuses on the principal effects of these changes for Cayman corporate open-ended investment funds. There may also be implications for certain closed-ended fund structures that use a Cayman corporate vehicle at general partner, fund or portfolio company level¹.

Solvency declaration on voluntary liquidation

The amended Law imposes a more comprehensive regime in respect of the voluntary winding up of Cayman companies. Upon a voluntary winding up, all of the directors must sign a declaration of solvency or, failing that, the liquidator must apply to Court for an order that the winding up continue under the supervision of