Bondholder Litigation Under The Spotlight In The Offshore Jurisdictions

In a sign of what may be to come, a number of recent judgments have been handed down in the BVI, the Cayman Islands and Hong Kong dealing with the ability of ultimate beneficial noteholders to petition for the winding up of the issuer of US law governed notes. Given the current economic climate, with expected increases in high yield bond defaults, it seems certain that more investors will be looking at their enforcement options in the near future. Furthermore, as the judgments to date are all first instance decisions, it is likely that we will see authority at the appellate level sooner rather than later.

In this article we address the recent decisions in this area. The key takeaways are as follows: