When Shareholders Become Creditors - Redeeming Shareholders In Cayman Fund Liquidations

In the current uncertainty of the hedge fund climate, the question is frequently raised by concerned investors as to their position in a liquidation or prospective liquidation of a Fund, if they have outstanding unpaid redemption requests or if they are considering serving redemption requests.

The position of redeeming shareholders varies according to whether the liquidation of the Fund has commenced before or after the redemption date falls due (as provided for in the Fund's Articles of Association). The commencement of the liquidation, for these purposes, is the passing of the special resolution to wind up in the case of a voluntary liquidation, and the presentation of the petition for winding up in the case of a winding up by the Court.