Loss Of Substratum: ‘A Modern Context'

Introduction

The recent decision of Mr Justice Nigel Clifford in Re Harbinger Class PE Holdings (Cayman) Ltd¹ has revisited a line of local authority developed over the past 6 years. Although the case was found to be distinguishable on its facts, Clifford J's analysis has recast the spotlight on an issue that has enlivened debate amongst practitioners in the jurisdiction, leading to calls for clarification on the appropriate test to be applied in the context of just and equitable winding up petitions presented on the basis of a claimed loss of substratum.

The facts in Re Harbinger were straightforward: the Court heard a winding up petition presented by a shareholder whose participating shares in the subject company were received in partial satisfaction of that shareholder's redemption request from a related master-feeder fund structure, where investors subscribed into an offshore feeder which was the sole shareholder in the master fund, through which the